Handling graft in exim trade

Last Tuesday, the Supreme Court held that prior sanction is not mandatory for the Central Bureau of Investigation to conduct a probe against senior bureaucrats in corruption cases. Will this make any difference to exporters and importers?

They deal with a number of government agencies but corruption is not the norm everywhere. I have never come across anyone complain of corruption in the Reserve Bank for getting any approvals or in banks for putting through their transactions. Very rarely have I heard of having to please an officer for getting some loans.

For clearance of goods through Customs, most exporters and importers retain agents. Where the goods are importable without a licence and on payment of full duties, most consignments get through without much hassle. However, where classification or valuation or exemption issues arise, importers usually weigh the cost of bribes against cost of delay in clearance. For large consignments, bribes form a small proportion of overall costs. For small importers, litigation can be costly. So, most importers prefer to get the matter settled rather than fight.

Export consignments are rarely held up by the Customs but here again, when issues on eligibility for any benefits or overvaluation and the like tend to delay the consignment, exporters do not mind the easy way out. For matters like clearance against advance authorisations or redemption of bond, standard rates for 'speed money' are agreed at the operating levels. It is when the demands are unreasonable that the trade tends to protest but they do so privately rather than confront the corrupt, for fear of retaliation.

Invariably, excise sealing of export consignments or getting any rebate or refund cheque involves satisfying of officials. The demands tend to vary but the smaller exporters suffer more. The need for quick movement of goods or earlier receipt of rebate or refund tilts the scale in favour of greasing the palms.

For dealing with Directorate General of Foreign Trade offices, most exporters hire consultants and ensure smooth processing of their claims. A lot depends on the head of the office and the staff/officers handling the files. Some are very helpful. Quite a few do not obstruct legitimate claims. However, there is no dearth of frivolous deficiency letters that send a clear hint of expectations. In any case, few exporters resort to complaints when they can find more agreeable ways to expedite their claims. In all the offices, routine matters cost less but exceptions, usually dealt with at higher levels, can be expensive. The widespread perception is that bribes are necessary to get your item included in the list of items eligible for benefits, say under the Focus Product Scheme. It involves discretion of senior officials, smart enough to draw suitable recommendations from subordinates.

Complex laws and onerous documentation requirements increase the scope for errors and corruption. Unwarranted deficiency letters and discretionary handling of exceptions lead to bribes. These problems will not go away easily unless the laws are clear and easy to follow. By removing the need to get a sanction for investigation, the Supreme Court has removed a shield for the corrupt. It will help if the senior decision makers let go of their discretion and bring in systemic changes that make it easier for exporters and importers to conduct business.

tncr@sify.com