Time Taken To Clear Cargo Tells A Lot About Ease Of Doing Business

Trade & Policy

Time Taken To Clear Cargo Tells A Lot About Ease Of Doing Business

India's improved ranking on World Bank's Ease of Doing Business index roused much interest in the steps being taken by the government to further bolster this position. A pivotal component of measuring ease of doing business is the time and cost associated with the procedures involved in trading across borders. An effective way to gauge performance on this benchmark is by conducting a time release study as per the guidelines of the World Customs Organisation (WCO).

Jawaharlal Nehru Custom House (JNCH) at Nhava Sheva, the largest container port in the country, recently completed Time Release Study 2018. It is essentially an exercise in measuring the time taken in clearing import and export cargo for a sample period, the first week of January 2018 in this case.

While the overall release time has significantly improved from 181 hours in 2017 to 144 hours in 2018, we still have a long way to go to achieve the average release time of 72 hours, which is India's commitment under the Trade Facilitation Agreement under the aegis of the World Trade Organisation.

While the results of the study are encouraging, it offers deeper insights into the factors that contribute to the overall release time. Despite the option of filing a bill of entry in advance being available, which enables completion of scrutiny of documents before the arrival of goods resulting in 40% reduction in release time, 40% importers still do not opt for this.

The study also delved into the impact of statutory changes made in the Customs Act, 1962 to nudge the trade to file bill of entry immediately upon arrival of goods and pay duty within 24 hours of assessment. The data shows that these changes have been well received by the trade but still, there is a huge scope for improvement. The fact that late filing charges, for not filing bill of entry within 48 hours, to the tune of Rs 3.11 crore and cumulative interest payment, for late payment of duty, of Rs 76.58 lakh accrued to the exchequer in a week gives enough food for thought to the stakeholders as far as reducing the cost of conducting business is concerned.

TRS 2018 examined the impact of facilitation schemes such as Direct Port Delivery(DPD) and Authorised Economic Operator (AEO) available to importers and other stakeholders in the supply chain based on their compliance track record. It was found that the advance facilitated bills of entry by AEOs had an impressive release time of 69.18 hours, well below the national commitment of 72 hours. Despite the obvious benefits of enrolling in the AEO scheme, India still has only about 578 registered AEOs. It is interesting to note that while the findings of the study converged with World Bank's Ease of Doing Business Report 2018 findings in case of exports, it was at great variance in case of imports. Both the studies pegged average release time in case of exports at approximately 84 hours. However, in case of imports, the World Bank has reported a release time of 267 hours for auto components from South Korea.

TRS 2018 recorded an average release time of 126 hours for the same based on time stamps available in the system. Whereas the World Bank report is based on the perception, the TRS data is based on the actual time stamps available in the system. The large gap between perception and reality is alarming. Wider outreach programmes and constant engagement with the stakeholders shall help mitigate this gap.