Sep 30, 2017

Musings about Niryat Bandhu - Export promotion through training

Govt of India started a program under Niryat Bandhu (Exporter's friend) scheme during 2013. It was an ambitious scheme and continues today. Hundreds of thousands have been trained across India under the scheme. However, the efficacy of the same, and the outcome has not been scientifically evaluated. 

I was posted at Bangalore at the time of launch of the scheme. My jurisdiction at that time covered the entire state of Karnataka. My then boss, an expert in trade himself, gave me a lot of freedom to implement the program in our jurisdiction. We launched out the program systematically. The program covered three training components. 

1. Training new entrants to international trade
2. Outreach programs with various industry clusters
3. Outreach programs with universities and colleges

Apart from the above three, at Bangalore, we took initiative to develop few video tutorials for training newcomers. The videos are hosted on youtube and the link is available on the main website of DGFT. A talented junior who had joined recently with me in Bangalore helped me develop these videos. The videos which were developed for less than Rs 350000 are crossing 350000 views as I write this. 

The first part, training new entrants was an eye opener. A newcomer faces unique challenges. While we trained hundreds of such first time exporters and importers, we learnt nuances of trade that no foreign trade institute could teach (Almost all trainers are graduates of Indian Institute of Foreign Trade). As we interacted with exporters from almost all sectors, it gave the trainers an overarching understanding of international trade. It also gave immense satisfaction when we were able to launch a few into real trade. As their first consignments sailed, we felt elated as if our own consignment has sailed. The journey from taking an Import Export Code to actually getting them to export was a real learning one. At the same time, it was felt that the module we were trying to cover for the newcomers was too elementary, unless we got into the handholding mode, which we were able to do only for few. Expanding the training modules, while certainly beneficial to exporters, would severely affect our day to day work at office of running various export promotion schemes. Handholding more than a few at a time was too taxing on us. Therefore, a balance needed to be struck. We decided to standardise the modules, and collaborate with various export promotion agencies, banks, customs department, Export insurance body (ECGC), Export inspection agency and so on. This helped us a lot in running the modules better as these agencies took up their respective parts of training very efficiently, and our module automatically expanded to cover all these aspects of trade more comprehensively. In terms of handholding, the trainers from other departments were handy and available. The module has more or less stabilised now and is doing good job. 

The second part, outreach with industry clusters was another unique experience. We started by targeting industry clusters where we could organise specific programs beneficial to these industries. For example, Channapatna in Karnataka has a thriving toys sector where wooden toys with GI mark are produced and exported. The artisans are usually small scale and most of them don't know much about exports. Karnataka government has given good encouragement to this sector by giving space and helping to build a toy park nearby. Export promotion council for Handicrafts (EPCH) has been helping some of these artisans effectively. We liaised with EPCH to conduct Niryat Bandhu program with the artisans. The big learning was that beyond general knowledge about exports that hardly helps them when they hear it like a story, they would benefit better through specific handholding at the time of difficulty to help them overcome the regulatory requirements and export. This is exactly what we did. We developed our relations with EPCH and became available to the artisans in times of need. We had few successful exports using export promotion schemes during my time. Similarly we conducted programs with Agri exports cluster, textile sector, engineering sector and so on. In most of the sectors, the key learning was that the intervention is needed in terms of handholding at the time of need, once the basic knowledge is imparted. Also when it comes to basic knowledge aobut trade, larger industries have dedicated teams that have requisite knowledge in international trade, but the medium and small industries sector need training. Therefore, during the later part we focused more on small and medium enterprises for training purposes. The idea was simple. Give them enough knowledge on a bigger scale, and when need arises, they would know where to dig deeper. This philosophy in training has keep us in good stead till now. 

The third part, outreach to students in universities and colleges went almost nowhere. Most of such programs, except for the ones where we were talking to students in entrepreneurial courses or MBAs, were flops. I still remember having an audience at a college where a student was sleeping in the auditorium. Even MBA students were more interested in regulatory aspects than wider picture. There was a fault in the way the training was administered to these students. I have corrected my presentation when I address students now. A bigger picture view that covers the evolution of international trade in India, with lots of interesting examples, and a better policy angle, gives a twist that encourages the students to engage. However, as Niryat Bandhu modules are not standardised, it depends on each officer in the jurisdiction whether she corrects or updates her course to suit the needs. 

I am an ardent supporter of Niryat Bandhu program. The program needs to be upgraded and standardised. Right now, as implemented in most parts of the country, it has become a non standardised mess. Officers impart whatever training they think is good. While most officers are good in themselves, and understand ground realities, it would be better if there is some standardisation when a program is launched at this scale. 
The program also needs to go online. While the videos developed by our team in Bangalore is a starter, it would be better if all modules are made online and uploaded. This way, the dependence on physical training could be minimised. I need not go into advantages of online mode for blog readers. 
Also, international experience has favoured such programs over generic fiscal incentives. I had elaborated about it in an earlier post (partly reproduced below)

It is in this light that a recent study conducted by the World Bank in Tunisia, titled "Are the benefits of export support durable" gathers importance. The study can be accessed here. The study is interesting because it tries to isolate the effect of export assistance given, under a program named FAMEX in Tunisia, to different sized firms over a period of time. FAMEX grants were used mostly to co-finance the cost of technical assistance and marketing services provided by local and foreign experts. Five types of activities were financed: (i) market prospection, (ii) promotion, (iii) product development, (iv) firm development, and (v) foreign subsidiary creation.

The study finds that relative to the control group (which was not given the FAMEX treatement), the experiment group showed statistically significant improvement in export performance. However, this advantage was lost over a period of four years and firms in the control group caught up. There was also an effect of the size of the firms in question. The medium sized firms retained better performance over period of time, over smaller and larger firms. The spillover effect (from treated firms to the control group firms) was shown to be non-existent. In the words of the paper:
...the paper considers also the longer-term impact.....beneficiaries initially see faster export growth and greater diversification across destination markets and products. However, three years after the intervention, the growth rates and the export levels of beneficiaries are not significantly different from those of non-beneficiary firms. Exports of beneficiaries do remain more diversified, but the diversification does not translate into lower volatility of exports. The authors also did not find evidence that the program produced spillover benefits for non-beneficiary firms. However, the results on the longer-term impact of export promotion must be interpreted cautiously because the later years of the sample period saw a collapse in world trade, which may not have affected all firms equally....