The government is looking to expand the scope of the singlewindow clearance mechanism for importers launched on April 1, which could significantly cut the cost and time for importers and, in turn, help improve ease of doing business.
To further simplify inbound shipments, the government is working towards allowing all physical import licences to be uploaded online with a digital signature. This will do away with the cumbersome compliance measures requiring importers to show physical copies of import licences or rules of origin certificates to the authorities each time.
“The next step is to do away with the need to present physical copies of licences each time one imports. It will all be made online within the next two months,” said a government official.
The import facilitation move is expected to benefit a large volume of imports and, in turn, the economic growth and manufacturing, which is largely import- dependent.
Currently, a bill of entry requires an average of three documents. An importer has to go and present physical copies of documents for approval from the authorities. The government’s proposed initiative will allow importers to upload scanned documents with digital signatures.
“With this, an importer will not have to do anything. After uploading the scanned copy with digital signature once, you don’t need to redo it. This will minimise interference,” said the official.
The documentation requirement also pertains to catalogues with description of goods, scientific background etc. The government is upgrading capacity of its processes and servers to allow the huge volume of documents that would be uploaded.
India is ranked 133 in the World Bank’s ease of doing business ranking on the “ trading across borders” parameter on account of cumbersome paper work and high costs.
Documentary compliance takes 67 hours and four hours, respectively.
Border and documentary compliance for imports together cost an average $695 in India compared with $ 148 in Organisation for Economic Co- operation and Development countries, according to the rankings.
Officials, however, countered this saying the facilitation level for trade in India was 70 per cent.
The government on April 1 launched asingle- window mechanism framework, which is seeing 17,000 bills of entries every day.
“Now an importer is not required to go through various other agencies while making consignment declaration. They are automatically routed through. There have been well over 300,000 bills of entries through the facility since the launch,” said the official.
The Single Window Interface for Facilitating Trade provides a singlepoint interface for clearance and has benefited 97 per cent of India’s imports. It has connected 50 offices of six government agencies with the Indian customs department. These are the Food Safety and Standards Authority of India; Department of Plant Protection, Quarantine & Storage; Drug Controller; Animal Quarantine; Wild Life Crime Control Bureau and Textile Committee.
Imports are now subjected only to risk- based checks by all these agencies instead of compulsory testing.
New US worry for exporters
Indian exporters have reason to worry about the new Trade Facilitation and Trade Enforcement Act in America, signed into law this February.
Under it, the US Customs may stop any imports for reasons such as health and safety, protection of intellectual property rights, currency manipulation, goods produced using forced or child labour, money laundering, bribery and various other practices which are held to put US industry at a disadvantage.
The Act is already in force and India is seen as one of the countries under watch. US President Barack Obama had said while signing the new law that US industry needed protection and actually mentioned India in connection with dumping of steel products. Hala Bou Alwan, head of risk market development at media and information services entity Thomson Reuters, said: “The US Customs are under obligation to screen and grade whatever is imported, and ensure the exporter has not violated any prescribed norms.” India should, she advises, be pro- active and ensure compliance.
Says D S Rawat, director- general of business chamber Assocham, “ The intention of the Act is good, which is to discourage bad business practices. However, such provisions may be used to protect local manufacturers, in the garb of ( checking) forced labour, money laundering, bribery, etc.” It is a fact that compliance costs in countries like India are much lower compared to Western nations. Partly also due to flouting of rules by small and medium enterprises in the supply chain. Mukul Shrivastava, partner, fraud investigation & dispute services, EY, said, “ Indian organisations are taking steps to be compliant in the real spirit from a supply chain and integrity standpoint.
Companies will have to focus on pro- active measures to minimise, if not zero- ise, risks around non- compliance. That said, for fair play, the decision makers will need to adapt a non- judgemental approach to ensure the Act does not become a barrier for cross- border trade.” As an example, there is gold smuggling into India. It is not easy for ultimate jewellery exporters to always verify the source of gold. Technically, this violates the US law. Textiles or apparel are another such product, where the value chain is a long one, with the unorganised sector also coming in. Hala adds: “ The process on how to approach such issues is to be finalised and we believe there should be a compliance manual and processes’ guidance, internally within organisations and externally from regulators. However, the exporting companies have to give undertakings that norms are being followed to the best of their knowledge, and have to secure similar undertakings from their suppliers down the line of the manufacturing process. The companies should not be waiting to do that until regulatory detailed processes are in place.” The undertakings and declarations should contain a pledge not to deal with child labour and the like. And, policies to ensure compliance with various other provisions. India’s mercantile export to the US is around $ 40 billion annually. Gems and jewellery, pharmaceuticals and textiles are among the top exports. Hala said they were getting requests from Indian companies on the Act. “ We ask them to know their suppliers and ensure they deal with legitimate sources. We ask them to educate their staff on dealing with this and, further, educate their suppliers in this regard — suppliers have to know very well their own suppliers. It’s a chain which should be always a clear and clean one.
Business Standard New Delhi,23 May 2016
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