Centre draws up plan to ease cross-border trade

The Centre has identified a series of steps to further cut down export-import related red tape by 2022 and make cross-border trade easier for businesses.

The steps include legislative, administrative and technology-related changes. Reduction in penalties in cases where the breach is voluntarily disclosed by the merchant and releasing shipments prior to final determination of customs duty payable are among the changes outlined by the Central Board of Indirect Taxes and Customs (CBIC) in the plan.

The idea is to reduce cost and time involved in cross-border trade, make the legal regime more predictable and improve the ease of doing business. One key target, according to the plan called ‘National Trade Facilitation Action Plan’ is to reduce cargo release time to 12 hours for outbound air cargo and 24 hours for outbound sea cargo. The target is 48 hours for inbound sea cargo and 24 hours for inbound air cargo. This, CBIC expects, will improve the investment climate in the country.

The steps being planned to achieve these goals include introducing provisions for voluntary disclosure of violations and penalty mitigation, release of shipments prior to final determination of the customs duty and restricting introduction of new pre-shipment inspection requirements, says the action plan. The efforts are part of India’s commitments under a World Trade Organisation deal on trade facilitation.

During the pandemic, the customs department took several steps to reduce paperwork and eliminate physical interface between merchants and officials. Cutting red tape and making cross-border trade simpler is a priority for the Narendra Modi administration as it is flagged by the World Bank as one of the key determinants of the ease with which business could be done in a country.

India has been consistently working on improving its global ranking in ease of doing business. The World Bank’s Doing Business 2020 report had pointed out that India’s reform efforts targeted all the areas measured in the doing business ranking, with a focus on areas such as paying taxes, trading across borders and resolving insolvency.

India has made “a substantial leap upward” by improving its position from 130 in the Doing Business 2016 ranking to 63 in 2020, as per the World Bank report. The goal of the latest trade facilitation action plan is to help improve India’s position to the top 50. World Bank’s ‘trading across borders’ indicator measures the time and cost associated with the logistics of export and import and covers documentary compliance.