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Need to reform Finance Ministry to facilitate exports, imports: Amitabh Kant
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SME Times News Bureau | 29 May, 2020
Niti Aayog has recommended to the Finance Ministry the setting up of a
National Trade Network (NTN) on the lines of GSTN to facilitate import
and exports and flagged negative interventions at the field level where
customs officers raise irrelevant queries without accountability and
sometimes, even rent seeking.
In a letter, Amitabh Kant, CEO,
Niti Aayog, has suggested to Revenue Secretary Ajay Bhushan Pandey to
propose further changes in customs, including improving information flow
and making customs processes and IT systems more efficient.
Kant
has said in the letter that the time has come to set up the NTN on the
lines of GSTN integrating all departmental data flows into one
integrated system.
He added that this will not only facilitate
exports and imports by existing firms but will also bring in a large
number of MSMEs who today have to export through the export houses and
third parties on account of the complexities in the current system.
This will also radically reduce the cost of transaction and make India a highly efficient country.
It has also sought modification of the Risk Management System (RMS) to record/reflect actions of field officers.
The
Niti Aayog has flagged enormous negative intervention at the field
level. "Customs field authorities are legally or otherwise vested with
enormous powers to raise irrelevant queries with no accountability. To
avoid delay and harassment, trade agrees to speed money", it said.
At
many ports, particularly at small ones, including in the hinterland,
officers randomly ask Custom House Agent (CHAs) to open consignment.
Customs has not introduced a serial number based physical examination
system clearly mentioning that unless the same is given to exporters or
his agent, consignment will not be allowed to be opened by their field
officers. Percentage of shipments undergoing physical examination is
still very high. While officially RMS cleared shipments are not
physically inspected, customs officers might still require a 'physical
check' for a variety of reasons.
"This results in delays (officer
has to be first identified/deployed and then physically travel to where
the goods are being held), discretion (once there, there is no
guaranteeing what documents or even physical inspection the officer
might want to do), and rent-seeking", it pointed out.
"Even in
the absence of rent seeking, officers often demand cars/free meals/other
personalized services that brokers/CFS operators have to provide to
ensure presence of officers on location, and expeditiously undertaking
their job", it was pointed out.
Customs uses a sophisticated Risk
Management System or RMS. But many times, Customs officers have reasons
to reject the RMS recommendations and go for inspection of the goods.
The basis of decision making must be entered into the system, and
available under the RTI with adequate anonymisation of individual
shipments and their consignees, along with figures indicating to what
extent in percentage terms the over-ride led to an actual finding of
non-compliance.
Customs may use this data for developing
analytics tools that will further reduce RMS over-ride by establishing
guidelines for officers for making such decisions, it has recommended.
Niti
Aayog has also sought to reduce cartelization between shipping lines
and others. Cartelized behaviour between shipping lines and their
agents, CFS operators (and in some case terminal operators) and freight
forwarders/brokers often results in padding up of bills and firms are
made to pay for unnecessary charges. In many cases, firms are forced to
use certain services or certain facilities (such as a specific CFS or
ICD) and have no choice in the matter.
Since many large shipping
lines have a freight forwarding business as well (and by extension also
in the brokerage business), such behaviour becomes even more rampant.
Any
random check of invoices would show that there is marked deviation from
published rates due to large number of 'operational variations' and
'situational exceptions'. While such variations and exceptions are a
common feature for logistics services that have to adjust dynamic and
unpredictable operational needs and environment, this also provides an
opportunity to unscrupulous players to 'game' the system.
The important recommendation to set up a National Trade Network (NTN) is to enable all export-import related compliance online.
The
NTN will allow exporters to file all information/documents online at
one place; there will be no need to deal with customs, DGFT, shipping
companies, sea and airports, and banks separately.
The inbuilt
system intelligence will route the required information to the
appropriate agencies. Centralised submission, assessment and processing
will minimise the need for posting of large numbers of officers at the
local customs house, central excise or DGFT offices.
Today, over
80 per cent of officers doing trade-related jobs are posted in the local
offices. These officers process applications or carry out assessment of
cases relating to a designated office. Shortage of staff impacts the
output at many places.
With NTN, while officers may continue to
be located in different locations physically, they will be available to
assess files submitted anywhere in the country. A service agreement will
bind all organisations to respond within 2-5 hours, and enable users to
receive permissions online, Niti Aayog said.
Among the customs
reforms recommended is to improve the information flow. The first task
is to use simple language and ensure transparency in issuance of
notifications.
"It is impossible for a layman (and often for
individual with expertise, including the CBIC officials) to actually
figure which rules, procedures and regulations are extant for specific
types of trade situations. The 'paper' mess has simply been digitised",
the recommendations said.
"For example, notifying import duty is a
crucial task of Customs. Yet, finding correct customs duty for a
product is a pain. You need an expert to wade through the maze of
hundreds of customs notifications issued every year. The notifications
are not self-contained and amend part of an earlier notification issued
years ago", the recommendations said.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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