A week since customs authorities started scrutinising consignments from China at all major ports, there appears to be some let up. Industry sources told CNBC-TV18 that top tier importers are being exempt from the 100 percent examination drive. This comes as a relief for firms like Toyota, Honda, Samsung, LG, HP and Siemens.
Sources said importers who qualify as AEO-T3, are eligible for these relaxations. Only 11 companies meet the AEO-T3 criteria.
In July 2016, the Customs department had launched the Authorized Economic Operator or the AEO scheme. Under this scheme, as per global best practices, importers and exporters would be required to demonstrate compliance with legal, safety norms of international trade, as prescribed by the Customs. Correspondingly, the classification as AEO would allow importers and exporters benefits such as fast tracking shipments, waiver from issuance of guarantees, deferred payments of duties and preferential treatment by Customs.
Importers and Exporters are classified as AEO-T1, AEO-T2 and AEO-T3, where T3 represents the highest level of compliance on legal, safety and security parameters.
This relaxation, however, will do little to address the wider issue of Customs restrictions on Chinese imports. Only 11 out of the 3500-odd entities, registered under the AEO scheme, fall in the T3 category.
The inspection drive by the Customs was reported to have begun around June 22, with the authorities refusing to clear imports from China without 100 percent inspection. Previously, only around 30 percent of the consignments would be subjected to checks, with 70 percent being cleared on filing of Bill of Entry.
Importantly, there is no formal order or circular from the government to the Customs department. The US India Strategic Partnership Forum (USISPF), a representative body of American Companies manufacturing in India, had red flagged the lack of transparency. The USISPF urged that at the very least, Customs should publish the policy or orders for taking such measures, to allow room for certainty, predictability and planning for global investors.
The industry has been protesting against what they call as an opaque and arbitrary move. Various sectors such as mobile, electronics, auto and pharmaceutical have been impacted severely.
The Indian Cellular and Electronics Association, a grouping of cell phone manufacturers in India, had written to the Finance Minister, flagging supply chain disruptions. In the letter to the FM, the ICEA had argued that the adverse action by Customs had impacted over 200 factories. The letter had cautioned that for global companies needed to have confidence in the logistics machinery, to invest in India.
Similarly, the Society of Indian Automobile Manufacturers (SIAM) has moved the government for clearing up import congestion at ports. SIAM believes that manufacturers are likely to begin feeling the impact of disruption if the congestion at the ports continue.