The post-Covid normal would lead to greater competition for export markets as the size of the pie gets smaller due to income shock and rising protectionism. Covid has also expedited trends towards greater use of robotics and automation and therefore in-sourcing of goods in more advanced economies.

It is even more imperative now that our exports cross borders with the least hindrance. Across the world, successful exporting economies have used risk management in scrutiny and inspection of export consignments as a tool to ensure that 1 per cent or less of such consignments are subjected to any hindrance at the gateway port.

Consignments move directly from factory into the port and onto vessels or aircraft. As India plans for its National Trade Facilitation Action Plan (NTFAP) 2020-22, there is need to make a commitment that by 2022, 1 per cent or less of Indian exports would undergo any processing at gateway ports. Here are some ideas to achieve that goal.

Globally, Customs departments are moving towards an ecosystem where majority of the processing of information, assessment, and decision-making is undertaken either prior to arrival of goods at the port or after the goods have left Customs jurisdiction. Indian Customs have put in the building blocks to achieve this. Advance filing of custom declarations allows Customs to undertake risk assessment well in advance of goods arriving in the Customs jurisdiction.

However, much of the assessment and verification processes are still being done after the goods have entered Customs jurisdiction at the port. All of this can be done after the goods have been exported using targeted post-export assessment. Such post-export assessment can be undertaken using randomised identification of consignments and entities to serve as a check against any attempt to misuse the facilitation being provided to trade.

Direct Port Entry (DPE) facility is limited to firms that have self-sealing permission by Customs. There is no reason why DPE cannot be extended to all exporting firms. Customs could consider developing on-site inspection near parking plazas in major ports/airports.

A random 1 per cent of consignments from firms not having self-sealing permission could be selected for physical inspection at these sites based on identified risk parameters. The rest of the shipments could go directly to port. By the time goods arrive at a port, Customs officers would already have the required information and the Let Export Order (LEO) can be generated online. This action will bring down Customs processing time at a port to near zero levels.

Customs should introduce a serial number-based physical examination system clearly mentioning that unless the same is given to the exporter/importer or their agent as a formal alert through Customs EDI, the consignment will not be allowed to be opened by their field officers. Once a serial number has been issued, the relevant officer would have to follow through with an electronic report of the results of the physical examination which would also be made available electronically to the trade or their agent.

Further, inspections are either to be carried out using field cameras or using CCTV recording in designated inspection zones. And the CCTV record must be retained for an adequate time and be made accessible to the exporter/importer and their agent. All facilities under Customs bond such as CFS or ICDs must be mandated to develop facilities sufficient to support this.

Indian Customs is already using a sophisticated risk management system (RMS). But the percentage of export shipments identified through risk assisted targeting is higher or similar to imports. This is startling given that imports represent far greater risk of revenue loss and other threats such as smuggling or such imports posing a risk to Indian health, safety or environment. The loss of foregone revenue from export incentives pales in comparison to such risks. There is therefore an urgent need to move export RMS to a level where 1 per cent or less of export consignments would be identified for further scrutiny.

Also, Customs officers occasionally reject RMS recommendations and go for further scrutiny, or even inspection of the goods. In order to drive accountability and prevent misuse of such powers, the basis of decision-making must be entered into the system, and made available under RTI with adequate anonymisation of individual shipments and their consignees, along with figures indicating to what extent in percentage terms the override led to an actual finding of non-compliance.

Customs may use this data for developing analytics tools that will further reduce RMS override by establishing guidelines for officers for making such decisions.

In addition to these facilitation initiatives there is need for focussed transparency measures to reduce regulatory complexity for exporters and therefore reduce transaction costs of being in the export business.

Customs has moved to a system of faceless assessment since September 2019. While this is welcome, an additional step towards complete transparency would be to ensure that the officer conducting the scrutiny of entry do not have access to information on who the broker and importer/exporter is. In other words, complete anonymity. This will completely eliminate the nexus between unscrupulous brokers agents and dishonest officers.

It needs to be stressed here that the old logic of ‘human intelligence’ based on local experience of brokers and importers were often applied by officers to make discretionary decisions to safeguard revenue and other important sovereign interests no longer applies to faceless assessment since the assessing officer can be located anywhere in the country and not from the local field formation.

Currently, an authorised officer has to individually check and clear each drawback, EPCG, and other ‘incentives related’ shipping bills. On average, authorised officers in major gateways have to process 400-500 such bills a day. This work overload leads to errors and delays in processing, which in turn results in hold-up of payments.

For many SME exporters, getting this cash is critical, and additional credit and processing fees required to meet their cash flow requirements arising from delayed processing can substantially reduce their overall margin of profit. There is urgent need to move to a risk based targeted system of scrutiny instead of processing each and every incentivised shipping bill to expedite payments to exporters and reduce unnecessary workload on officers.

As the government puts together NTFAP 2020-22, this commitment to making 99 per cent of exports facilitated with direct to port entry would be a true measure of ambition to make Indian exports globally competitive.

The writer is an international trade and logistics expert

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