New export customs system to bring down transaction cost: P Chidambaram

NEW DELHI: Indian exporters will now be able to access a new green channel Customs facility that will allow expeditious and hassle-free clearance and thereby bring down transaction cost.

Finance minister P Chidambaram on Wednesday unveiled a risk management system for exports at select ports in the country that will facilitate this process. “The underlying principle is trade facilitation,” Chidambaram said explaining the rationale behind the move, which is expected to bring down the time taken in clearance at Customs stations to a few hours in line with global practices.

The revenue department claims that the dwell time for imports has come down drastically after the launch of risk management system (RMS) for imports. Likewise, RMS in exports is intended to bring down the dwell time so that cargo meant for exports moves up quickly, leaves the shores of India towards its ultimate destination,” Chidambaram said.

The time currently taken for Customs clearance of export cargo in Mumbai is 1.6 days while at the Inland Container Depot in Delhi it is 3.68 days. The new risk management system for exports will be implemented in two phases. The first phase, rolled out on Wednesday, will be confined to exports getting Customs clearance and in the second phase, to be launched after six months of completion of the first phase, it will be extended to drawback stage.

Consignments will be cleared by Customs officials based on self declaration. Industry has often frequently complained about the high trade-specific transaction costs that impact their global competitiveness.

A commerce ministry task force had earlier pegged transaction costs at $12-15 billion, which was around 7-10% of total exports valued at $160-165 billion in 2009-10. Exporters in South-east Asia and China face much lower transaction costs of about 3-3.5% of their exports.

India started using RMS for imports in December 2005 and it has helped to bring in additional revenue of Rs 2,211 crore for the government through improved detection. Chidambaram said RMS is based on trust and is part of international cooperation efforts on trade-related issues. The facility will enable low-risk consignments to be cleared based on self-assessment declarations by exporters.