Smooth Operations: Measures to streamline customs procedures and port charges

Measures to streamline customs procedures and port charges

In the past few years, significant changes have been witnessed in customs and port charges. Procedures relating to the payment of customs duties and clearance of goods have been simplified, making it possible for importers to clear goods from ports faster as compared to the past. As a result, there has been a significant improvement in the World Bank’s Ease of Doing Business Index under the “Trading Across Borders” parameter. India’s ranking has jumped 78 levels in two years, from 146 in 2017 to 80 in 2018 and then to 68 in the 2019 ranking.

Recent developments

The Central Board of Indirect Taxes and Customs (CBIC) has taken a number of trade-friendly and IT-enabled initiatives to enhance the efficiency of customs procedures. In December 2020, the CBIC issued guidelines to streamline the process of faceless assessment of cargo, and carried out the reassessment of goods/bills of entry. The development came in view of the issues faced by exporters, importers and shipping lines due to the acute shortage of containers and surge in freight rates. It also introduced a secure QR-coded shipping bill under the umbrella of “Turant Customs” in April 2020. The bill would be sent to exporters electronically after customs allows exports. Meanwhile, in August 2020, the CBIC rolled out Phase II of “Turant Customs”. Under Phase II, Delhi and Mumbai customs will be included, apart from extending services to customs zones under Phase I (Bengaluru and Chennai).

Earlier, in July 2020, the CBIC introduced new functionalities in the Indian Customs Electronic Data Interchange Gateway to reduce the need for physical interaction between customs and trade, and speed up the customs clearance process. In addition to this, the CBIC has taken a number of trade-friendly initiatives. These include 24×7 customs clearance of goods to avoid supply disruptions; machine-based automated clearance of imported goods; smooth assessment, examination and ancillary work of customs (bond acceptance, warehousing, port clearance, amendment to documents, etc.); and formation of a dedicated novel coronavirus help desk for export-import trade stakeholders on its website for the quick resolution of disputes. It also allowed importers to submit an undertaking in lieu of the requisite bonds during the lockdown period.

Port charges have an impact on the overall operational efficiency and competitiveness of the maritime sector. Over the past year, many Indian ports have revised their tariff rates and charges to ensure the optimum use of port facilities and services. The Cochin Port Trust revised its rates and fixed separate rates for coastal and foreign vessels, in accordance with the coastal concession policy. The port charges for vessels calling at outer anchorage for services including crew change, bunkering, ship stores and ship repairs were also revised and brought into effect from November 26, 2020.

The recent revision in port charges at Chabahar port has also greatly helped Indian ports. In November 2020, the Chabahar port authorities allowed 70 per cent concessions on port tariffs for traders from India, Afghanistan and the Commonwealth of Independent States countries. Accordingly, the concession and decrease in transportation costs at the port has increased its loading and uploading volumes from 200,000 tonnes to over 2 million tonnes.

In order to extend the concessions to iron ore importers, the Mormugao Port Trust announced concessional port dues for iron ore handling for the ongoing shipping season, from October 1, 2020 till June 2021. Earlier, in March 2020, Marine Infrastructure Developer Private Limited (MIDPL) also revised pilotage tariffs for vessels calling at MIDPL and/or handled at the L&T shipyard and the modular fabrication facility at Kattupalli port.

On the policy front, the Major Port Authorities Bill, 2020, was passed in the parliament in February 2021. In addition to decentralising the decision-making process and infusing professionalism in the governance of major ports, the bill has redefined the role of the tariff authority at major ports. The port authorities have been given the right to determine their tariffs, which will act as a reference tariff in bidding for public-private partnership (PPP) projects. Further, PPP operators will be free to fix tariffs based on market conditions.

The Jawaharlal Nehru Custom House (JNCH), India’s largest customs house, has also taken multiple initiatives to ensure smooth trade and improve the ease of doing business. In August 2020, JNCH launched e-office, an application developed to carry out office work electronically, thereby establishing a paperless environment in JNCH. Meanwhile, the implementation of blockchain, machine learning and artificial intelligence technologies is under consideration. It is expected to reduce the clearance time from 12 hours to 12 minutes. In February 2020, the customs department commenced the automated clearance of imported goods at JNCH on a pilot basis.

Summing up

The initiatives taken by the CBIC and JNCH have helped in enhancing the efficiency of India’s customs procedures. The digital interventions proposed by the government are expected to facilitate trade and customs. Going forward, customs authorities should be mandated to adopt electronically generated trade documentation to address economic and human challenges, thereby enabling smooth cargo operations and export-import.