Trade facilitation finally at your doorstep

Govt provisions form a holy trinity enabling substantial cost and time savings in customs clearance of goods

Even after the WTO Trade Facilitation Agreement (TFA) was ratified by the Indian government and it entered into force in February 2017, there was weariness about its tangible benefits for Indian trade or industry. Autonomous measures announced by the government to simplify customs documentation and ease procedures over the last few years were seen as sporadic, stand-alone measures with limited impact. But the dots are beginning to connect. The combined effect of these changes has acquired the critical mass to generate real and measurable benefits for trade both in terms of time and cost savings. With wider participation, these could snowball into a quiet revolution in the import and export logistics in India.
 

The trigger for the revolution comes from three measures. The first is the introduction of a Single Window Interface for Facilitating Trade (SWIFT), an electronic platform that allows importers to submit a common, integrated declaration for use by customs and seven participating government agencies such as the Drug Controller, FSSAI, Textiles Committee and Plant Quarantine. The declaration combines the data needs of all these agencies and avoids repetitive filing of the same information. The declaration is exchanged electronically with other agencies for their “no objection” before the goods are released to the importer. Many WTO members found the setting up of a SWIFT so daunting that no consensus could be reached on making this a mandatory obligation under the TFA! Yet, Indian customs implemented it in record time of just about a year.
 

The second is the implementation of the direct port delivery (DPD) scheme at Nhava Sheva and other major ports. Importers registered under the scheme can take direct delivery of their goods from the port terminal upon payment of duty if the consignment is assessed to be risk-free by the computerised risk-management system. Unlike the past, the container need not be transported to a container freight station (CFS) for completion of delivery formalities. Proactive efforts by customs to smoothen the scheme, advocate its benefits and encourage registrations have resulted in the number of DPD clients at Nhava Sheva increasing from a handful to almost 1,500 and the number of DPD containers from about 3,500 in January 2016 to 52,000 (35 per cent of the total) in December 2017.
 

The third is a legal provision to induce advance filing of a customs declaration. Accordingly, a late filing fees is payable for each day of delay from the day when the goods arrive. Recognising the value of “pre-arrival processing”, a specific obligation to adopt it has been included in the TFA. The provision has changed trade behaviour with advance filing reaching almost 58 per cent at Nhava Sheva.
 

These provisions constitute a holy trinity enabling substantial cost and time savings in customs clearance of goods. 

The Central Board of Excise and Customs has also revamped its Authorized Economic Operators (AEO) programme last year to simplify its eligibility criteria and enhance its benefits in keeping with the TFA. Importers, exporters and other members of the ecosystem can obtain three different levels of accreditation under the programme and secure additional benefits like prioritised clearance, reduced guarantees and even deferred payment of duties.
 

The trade facilitation agenda is an ongoing project encompassing not only customs issues but also of all regulatory agencies and entities at the border. It stretches to de-bottlenecking of physical infrastructure such as port capacity, road and rail connectivity, better usage of coastal transportation network etc. It is underpinned by a permanent institutional mechanism comprising the National Committee on Trade Facilitation chaired by the cabinet secretary and permanent committees on trade facilitation at each custom house for the generation of ideas on trade facilitation and improved inter-agency coordination.

On its part, trade and industry must step forward and enrol for programmes like AEO and DPD, ensure advance filing, and participate actively in these bodies to articulate concerns and suggestions. A little bit of cost saving does not hurt after all!

The author is a chief commissioner of customs. Views expressed are personal