India’s export story: Quick regulatory clearance to deal with supply

By Vijay Singh Chauhan and Nikita Singla

Exceeding the ambitious annual export target of 400 400 billion on March 21 was much talked about in the ruling elite and talked about in the media. This higher export performance is variously attributed to the global post-epidemic growth as a result of global paint-up demand and government initiatives under the rubric of “self-sufficient India”. A set of statistical reports, including the National Time Release Study 2022 (NTRS 2022) presented by the Central Board of Indirect Taxes and Customs (CBIC) on 11 April, focused on the role of trade facilitation, enabling time reduction. And the costs involved in export performance.

Although export development has been a priority for the Government of India for many years, with the aim of simplifying, modernizing and streamlining the export process, India has gained greater focus and urgency since ratifying the World Trade Facilitation Agreement (TFA). Trade unions in April 2016. During the TFA negotiations, it was argued that full implementation of the TFA could reduce trade costs by an average of 14.3% and increase world trade to USD 1 trillion per year, with the poorest countries benefiting the most.

India has fulfilled all its commitments under the TFA, including regular performance measurements through the average cargo release period as a single statistical indicator of trade facilitation performance. NTRS 2022 covers 15 major customs ports in the country – including seaports, inland container depots (ICDs), air cargo complexes (ACCs) and integrated check posts (ICPs), with the first week of the calendar year being given as a sample time. It conducts compliance with TFA commitments and evaluates progress in achieving specific targets set out in the National Trade Facilitation Action Plan.

Even a cursory reading of NTRS 2022 will reveal the initial focus on import clearance, apparently linked to regulatory architecture driven by revenue concerns. However, the export clearance process is expected to be fairly simple with minimal financial problems, requiring a few regulatory approvals for non-financial concerns related to products such as food or pharmaceutical items. As a result, the level of convenience of the shipping bill, where exporters’ self-declared risk-management-based tariffs are automatically regulated by seaports and the ACC, is a maximum of 69 percent. In addition, the average time of regulatory approval measured by the time of completion of the regulatory process from the arrival of the goods at the customs station by granting Late Export Order (LEO) by the customs is 4:04 hours for the ACC. , 11:07 hours for ICP, 29:47 hours for seaports, and 47:41 hours for ICDs.

Despite the rapid regulatory clearance of export shipments, NTRS 2022 poses greater logistical challenges to the export process. To better understand this, a typical export process can be divided into three stages: (a) pre-arrival stage – shipping starts with bill filing and the simultaneous movement of cargo from the factory to the customs port; (B) regulatory clearance at the customs port, after the arrival of the cargo until the LEO is subsidized by the customs; And (c) regulatory clearance at a later stage which involves the movement of cargo in the port premises up to the point of final departure (ship sail closure or rack departure or aircraft take-off or truck dispatch).

Data presented by NTRS 2022 reveals that considerable time is taken in the pre-arrival stage and post-regulatory clearance stage, as shown in the accompanying graph.

It is understood that the time taken in the pre-arrival stage is mainly responsible for the time taken in transporting the goods, which mainly depends on the distance from the factory / warehouse to the customs port. It was also affected by the transport disruption caused by Covid-19 as NTRS was operated in January 2022 – the time when the third wave of the epidemic was affected. It is hoped that with further progress under the ambitious Sagarmala program and the Dedicated Freight Corridor, the time taken in the pre-arrival phase will be significantly reduced, with the aim of improving inter-regional connectivity with ports.

The time taken in the third phase after regulatory clearance, like 92 per cent in the case of the ACC, is mainly due to logistical and infrastructural problems, which are often specific to the port.

For a deeper insight into the timing of the third phase, local studies at Jawaharlal Nehru Custom House, Mundra Seaport and ICD Tughlaqabad suggest that it is the uncertainty that is pushing exporters to arrive at the customs port before the scheduled departure. Is reflected. Based on this study, it can be temporarily concluded that due to logistics, infrastructure, ship / flight schedule, traffic congestion related challenges and other operational inconsistencies, Indian exporters prefer to err on the side of premature delivery of goods. , For fear of heavy consequences of missing scheduled ship / flight.

In conclusion, while the central government continues to play its role in boosting India’s exports, it is imperative to thoroughly analyze the port-specific supply chain challenges and strategize state governments to actively formulate their industrial policies to boost exports. The State Commission-specific ‘Export Preparedness Index’ of the Policy Commission is a positive initiative in this direction, which encourages the states to formulate export development policies and the spirit of cooperative federalism. Exports at the right time are the way to fuel India’s growth engine.

Vijay Singh Chauhan is the Customs Commissioner of the Government of India and Nikita Singla is the Associate Director of the New Delhi-based Bureau of Research on Industry and Economic Fundamentals (BRIEF). (The opinions expressed are personal and do not reflect the official position or policy of FinancialExpress.com.)