Trade Facilitation and Customs Valuations in India : Identifying the Gaps

Sachin Chaturvedi
JEL codes: 
RIS-DP # 115

In recent past, India has taken several measures to implement the trade facilitation measures. These have helped the private sector in a major way and have also helped in setting the stage for a WTO agreement in this regard which is all set to be launched depending on the negotiation dynamics. However, one of the key areas of concern among the private sector firms has been the one related to the customs valuation. There are varying perceptions regarding the implementation of WTO Customs Valuation (CV) Agreement in India especially in the context of trade facilitation (TF). In this paper, we present results of a survey conducted to understand the major issues confronting this important link of CV to achieve a TF friendly trade regime in India.
After interviewing a large number of firms, custom house agents and government officials we found that the Central Board of Excise and Customs (CBEC) and Ministry of Finance have put in place a large administrative set up to implement Indias commitments to the CV agreement. The introduction of risk management system (RMS) has provided a great support to the accredited traders as their consignments are cleared at much faster track. However, there are still many cases where industry has to wait for long in getting the goods cleared.
There are several reasons responsible for this situation including the large number of cases in which under invoicing is done especially by the traders which triggers a much closer examination of goods and hence much longer time in clearance and this also invites the discretionary powers being used by the customs. Other challenges come from the lack of clear instructions to the ground staff on new technology goods,
the import of which is expanding at a fast pace. A greater coordination between industry and customs agencies and intense training programmes for the ground staff may help in a major way to overcome these constraints.