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March 23, 2018

Skill development initiatives need more momentum to keep pace with the rapid changes in global trade development programmes

by Samir J Shah, Chief Mentor and Director, JBS Academy Pvt. Ltd

The recent upsurge in trade development policies, especially with the recent Indian ratification of Trade Facilitation Agreement (TFA) coupled with India’s desire to account for 3.5% of the total world’s export from the present 2%, calls for brisk implementation of skill development initiatives. Provision of adequate training to the workforce at an institutional level seems all the more imperative considering the two mentioned trends below:
— Studies suggest that with the full implementation of TFA, trade costs of member nations will decrease by an average of 14.3 percent and time by 1.5 day in case of import and 2 days in case of export.
— Ongoing trends also suggest that merely 20% of the staggering 28 million youth who are added to the overall national workforce every year are employable.

The agreement comes at the wake of various rapid development programmes that are aligned with the government’s international trade enhancement policies such as Make in India, Digital India, steps for ease of doing business, setting up dedicated zones with special incentives and launch of schemes like marketing assistance scheme, 3% interest subsidy scheme, extension of duty benefits under Merchandise Exports from India Scheme, etc.

One of the most lucrative sectors that will benefit immensely by the recent Indian ratification of Trade Facilitation Agreement (TFA) is the logistics sector. The $110 billion industry is currently growing at the rate of 15% per annum, and is expected to double its growth rate over the next seven years. Growth in other consumer markets, such as the FMCG, automobile, pharmaceuticals, retail, and infrastructure, will have a positive impact on the logistics sector. Having multiple channels of transportation like road, rail, sea, air and various sub-services like warehousing, packaging, material management, customs clearance etc, there are ample job roles requiring skill force. As per the study done by Ministry of Skill Development and Entrepreneurship (MSDE) and NSDC, it is projected to employ around 28.4 million people by 2022.

Nonetheless, the actual achievement of these targets will remain at a standstill until effective strategies to tackle the current constraints in the industry are not devised. Logistics sector is infested with the issue of skill gaps in the industry, such as gaps in the pace of skill creation and skill requirement, attrition, the insufficient addition of manpower, improper recruitment, lack of an institutionalized manpower creation environment, etc. All these factors ultimately lead to poor image of the industry and lessen attraction for youth as an employment option. Similar situations regarding skilled workforce exist in every sector.

Keeping in mind the above pros and cons of the ease of doing business, an adequate skill supply environment has to be created so that the exponential growth in trade and commerce in the country is in consonance with the level of its skill-level of its manpower. Foreign Trade plays an important role in the Indian economy, but it cannot become growth driver if the lack of skilled workers continues to be the greatest constraint in this journey.

India became the 76th WTO member to ratify the Trade Facilitation Agreement (TFA), which formally came into force on February 22, 2017. The agreement will boost the commerce in world market by developing various reforms by each member country like building transparency, expedite the movement of cargo across borders with less customs procedures, reduce formalities, decrease the transaction costs etc.

(Disclaimer: The views expressed in the article above are those of the author, Samir J Shah, Chief Mentor and Director, JBS Academy. The matter of this article has not been edited by skillreporter.com. SkillReporter shall not be responsible for any damage caused to any person/organization directly or indirectly.)