New Customs System to Reduce Costs for Indian Exports

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Nov. 14 – Indian Finance Minister Shri P. Chidambaram today announced the implementation of an IT-based Risk Management System (RMS) for exported customs goods. The RMS is designed to greatly speed up the clearance process for the export of goods and reduce the related transaction costs.

In explaining why the new RMS had to be implemented for the export process, Mr. Chidambaram stated that “the underlying principle is trade facilitation.”

According to Circular No.23/2013-Customs, the new RMS for exports has been developed with the following components:

  • Ensuring appropriate control measures for proper and speedy disbursement of drawback and other export incentives;
  • Effective utilization of human resources, to match the workload with the resources available; and
  • Ensuring proper and expeditious implementation of existing control over export under the applicable Allied Acts and Rules.

Previously, dwell time for exports often took a day or longer. With the new RMS, dwell time is expected to be reduced to only a few hours thus bringing India in-line with international standards.

The Indian government plans to roll out the RMS in two phases. The first phase, which went into effect today, is solely concerned with streamlining the customs clearance process for the export of goods. The second phase will begin six months later and will involve the RMS system being implemented in the drawback stage of the export process.

As a result of the perceived high trade-specific transaction costs, customs officials will clear low-risk consignments based on self-declaration. The RMS is expected to lower transaction costs and make India more competitive in the region as a result.

International organizations, such as the World Trade Organization, have expressed their approval on India’s implementation of the RMS.

In 2005, India implemented an RMS for imported goods. The RMS has proven itself to be very successful as the country saw an increase in revenue of Rs 2,211 crore.

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