A glitch in the new payment gateway, set up by India’s customs authority, is impacting the manufacturing of IT hardware as imports are stuck.

The new e-payment platform set up by the Central Board of Indirect Taxes and Customs (CBIC) on March 31, has been inoperational for over six days, holding back imported goods at the ports. IT manufacturers told businessline that the import-dependent electronics supply chain for goods, laptops and phones have been significantly affected, as certain parts required for manufacturing are stuck in customs. The companies have written to the Centre asking for a swift resolution of the matter.

Tough spot

Import consignments have been stuck in Bengaluru and Chennai since April 1, after the CBIC upgraded the automated payment system for custom duties on March 31. Members of trade have been unable to make payments on the upgraded system and manual alternatives for payments, set up by the customs authority, are also proving to be difficult to use by traders.

While the CBIC notified traders on Thursday that the interest accrued on late custom duty payments will be waived off, given the circumstances, certain IT companies manufacturing in India are already encountering troubles in production.

India’s IT manufacturing is heavily import-dependent, since most of the component sub-assembly happens in countries like China and Taiwan. These components are then imported to the country to be assembled in Indian manufacturing facilities. While many IT makers have inventories to tide them over, certain manufacturers are also reporting that their production has either slowed down or stopped entirely as a result of this issue.

Waiver sought

Sources also told businessline that IT makers have written to the Finance Ministry and the Prime Minster’s Office asking the Centre to reinstate the old duty payment option as well as waive off interest payments, along with demurrage and detention charges. While the CBIC has notified that interest payments on pending duty payments have been waived off, other issues have not been addressed.

“While the respective commissioners have been trying to resolve the issue manually, we would urge on behalf of the industry, that the government restore the old duty payment option till such time the new software stabilises. We are thankful that the CBIC has today notified Customs (Waiver of Interest) Order 2023 to provide relief. We would also request that on similar lines demurrage and detention charges also be waived off,” said Col. (Retd) Ali Akhtar Jafri, Director General, Manufacturers Association of Information and Technology.

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