To speed up the movement of goods across borders; India may clear imported items without any upfront duty (Payment of Duty) as a part of a revamp of the customs framework. As per some sources, the upcoming budget may include several measures aiming at relaxing the customs regime for businesses. It can also include other measures which allow traders to know their tax liability in advance even for existing transactions.
Imported Items May Clear Without the Payment of Duty
A senior government official said that they could make some changes on a priority basis in the upcoming budget. As per another official, the government is also operating on an overhaul of the customs act; but several key measures could be frontloaded in the budget.
Currently, authorities release the goods after the assessment and payment of duty. With the reverse of this system, goods will be released first and the assessment & payment of duty will take place after. The director general of the Federation of Indian Export Organizations (FIEO), Ajay Sahai, said that; the release of goods without ascertainment of duty would be hugely positive for the industry. Further, he added that detention and demurrage contribute as much as 4%, out of the 16% logistics cost in India.
India ranks at 146 out of 190 countries on the World Bank’s ease of doing business ranking on the ‘trading across borders’ measure. Prime Minister Narendra Modi wants India to bring into the top 50. As per the government, we can improve our rank by this action. India already improved its overall rank from 130 to 100 last year.
In India, border compliance takes 267 hours, i.e., more than 11 days for imports, as compared to the OECD countries, where it takes 8.7 hours for instance clearance. That translates into a cost of $536 per consignment in India compared with $111.6 in OECD countries.
As per the executive director, Rahul Shukla, the critical areas of concerns for a trader are assessment, refunds & disputes, clearance of goods, addressable in a time-bound transparent manner through IT-based tools and knowledge partnerships. More straightforward and predictable rules will go a long way to improve the trade outlook and help India’s position of trade facilitator globally.