The role of customs administration in the global supply chain is evolving at a fast pace, with the international trading ecosystem recognising customs as one of the main pillars of trade facilitation across international borders. While the nationwide lockdown to stem the spread of Covid-19 brought all the sectors to a standstill, the ports and shipping sector was allowed to operate for the supply of essential goods only. The impact ranged from reduced cargo operations to derailed project execution and revenue losses due to limited activity.
Recent developments
The Central Board of Indirect Taxes and Customs (CBIC) has notified a new system for filing bills of entry (BEs) for imports. A BE is a legal document filed by importers or customs clearance agents on or before the arrival of imported goods. It is submitted to the customs authority for clearance. As per the new regulations, if a consignment comes from Bangladesh, the Maldives, Myanmar, Pakistan or Sri Lanka via the sea route, the BE is required to be filed by the end of the day of arrival. For all the other countries, importers will be required to file the BE one day preceding the arrival at the seaport. If a consignment arrives at an airport or a land customs station (LCS), the BE will be required to be submitted by the end of the day of the arrival. According to the CBIC, the existing provision that a BE may be presented up to 30 days prior to the expected arrival of the aircraft or vessel or vehicle carrying the imported goods will continue. In addition, the CBIC has clarified that a timeline will be considered for the time of loading.
The CBIC adopted information technology (IT) fairly early and has a range of IT-enabled services today that are hosted at its centralised IT infrastructure set-up. It has recently introduced an electronic cargo tracking system for Nepal-bound shipments from Kolkata and Visakhapatnam ports. With this initiative, containerised rail cargo carrying third-country imports for Nepal via these ports will no longer require clearance by the Indian customs authorities. The ECTS is an electronic seal that, unless tampered with, ensures free container movement through the country’s international borders. It has been introduced on a pilot basis on rail routes from Kolkata/Haldia to Birgunj via the Raxaul LCS and to Biratnagar via the Bathnaha railway station and the Jogbani LCS.
ICEDASH is another initiative taken by the CBIC. It is a dashboard for monitoring the ease of doing business and helps the public see the daily customs clearance times of import cargo at various ports and airports. With ICEDASH, Indian customs has taken the lead globally to provide an effective tool that helps businesses compare clearance times across ports and plan their logistics accordingly. In addition to this, a machine-based automated clearance of imported goods has been introduced. Under this, the customs officer will be able to undertake all compliance verifications such as examination of goods even before duties are paid. Once the importer pays the duty, the customs system will automatically give a clearance or out of charge to the imported goods. In November 2020, the CBITC had notified a new policy and guidelines for setting up of container freight stations, inland container depots and airfreight stations. As per the new guidelines, the locations will be classified as green, blue and red.
Recently, the union cabinet approved a deal between India and the UK on information sharing and preventing customs offences. The agreement is expected to facilitate trade and ensure the clearance of goods traded between the countries. The agreement will provide a legal framework for sharing of information and intelligence between the customs authorities of India and the UK, and help in the proper application of customs laws, prevention and investigation of customs offences, and the facilitation of legitimate trade.
Key initiatives to tackle the Covid-19 crisis
The customs authorities were prompt in issuing guidelines to deal with the pandemic. Some of the key initiatives taken by the custom authorities to reduce the impact of the disruptions caused by the Covid-19 pandemic are clearing goods on the basis of acceptance of electronic country of origin certificates instead of physical certificates, electronic communication of PDF copies of BEs and issuance of e-gate passes to importers/customs brokers. Also, the e-office system was introduced and importers were urged to clear their consignments at the earliest so that the customs areas remain unclogged.
The Jawaharlal Nehru Port Trust (JNPT) has created a document processing area, introduced an electronic seal to provide secure and system-based authentication, set up a centralised export assessment cell, and made procedural changes to reduce documentation and char-ges, among others. Besides, JNPT has created the facility of “on-wheel sampling” on terminal premises. The customs house has also introduced a “one-time default intimation” option for importers for direct port delivery to the shipping lines.
In view of the excessive requirement of oxygen and related equipment in the country due to rising Covid cases, the Government of India has directed all major ports, including Kamarajar Port Limited, to waive all charges levied by major port trusts (including vessel-related charges and storage charges) and accord highest priority to vessels in the berthing sequence.
Major concerns
Due to issues pertaining to the unreliability of schedules, the time for customs clearance at inland container depots/container freight stations and the congestion on roads and rail, shippers build a buffer/cushion into the transportation schedule, leading to idle waiting time for export cargo at ports. Indian containers sometimes take around 50 per cent longer than Chinese containers for a similar inland distance. The duration is highly variable due to the lack of automation in customs processes, lower speed of trucks and trains, and congestion and inefficiency at ports, especially major ports. Also, the lack of uniformity in technology adoption across Indian ports and among various stakeholders has slowed down the process of IT integration in the entire maritime chain, thus leading to slower clearance of cargo. Any imbalance in export-import leads to empty movement and higher freight charges. High repositioning costs of empty containers is another concern area.
Next steps
Going forward, the customs authorities are planning to introduce comprehensive digitalisation of export/import transactions and leverage radio frequency identification-based technology to improve India’s export logistics. The customs authorities started clearing goods on the basis of electronic country of origin certificates instead of physical certificates, accepting PDF copies of BEs, issuing e-gate passes, etc. Efforts are also being made to resolve goods and services tax and customs duty issues of stakeholders in the cruise business.
There is a need for a greater focus on port connectivity and integration of different modes of transport. India should consider supplying duty-free bunkers to coastal vessels. Foreign flag vessels operating on the Indian coast carrying export-import boxes between two Indian ports are permitted to operate without payment of customs duties on bunkers, while Indian vessels are required to convert to coastal status each time they have to carry cargo on the coast. India also needs simplification of customs clearances and increased automation. As per rating agency ICRA, the pace of recovery in the port sector will be contingent on the revival of the domestic industrial activity and the global economy. Further, factors like changes in the global supply chain pattern during the recovery phase will have an impact on the cargo profile.
