India to streamline customs processes with South Africa, Singapore, UK to boost trade

The CBIC will also work out a similar deal with the European Union (EU) authorities once the proposed bilateral free-trade agreement (FTA) is signed, according to Naveen Kumar Jain, chief commissioner at the CBIC's Directorate of International Customs (DIC).

The idea is to sign agreements to mutually recognize the country-specific accreditation programmes in India and these countries for their accredited exporters, importers, and logistics players. 

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Once done, the privileges—quicker clearance of shipments at ports, lower inspection rate, quicker tax refunds, facility for deferred duty payment and acceptance of self-declaration of origin of goods—India gives to its accredited merchants and logistics players will be accorded to them in the partner country as well.

This highly valued accreditation scheme is called the Authorized Economic Operator (AEO) programme in India. Once another country signs a mutual recognition agreement, or MRA, with India, an Indian accredited exporter’s customer in that country, who may not himself be accredited under the scheme in that country, will also be accorded these benefits there. MRAs are believed to improve the ease of doing business and give a fillip to bilateral trade.

The CBIC is currently in the process of operationalizing an MRA India has with the US, Jain said, adding that the US has conveyed some additional technical requirements under the deal. One of the requirements is that Indian AEO holders have to comply with the IT security parameters of the US systems. 

Jain spoke to Mint on the sidelines of an industry outreach programme the CBIC held on Tuesday with the Confederation of Indian Industry (CII) to step up efficiency in international trade and to help expand coverage of the accreditation scheme.

India exported goods worth $ 14.4 billion to Singapore in 2023-24, its fifth-largest export market after the US, United Arab Emirates (UAE), Netherlands, and China. The UK is India’s sixth-largest export market, with shipments touching nearly $13 billion in 2023-24.

Besides the US and the UAE—the two largest export markets for India, the CBIC has signed mutual recognition agreements with Russia, Hong Kong, Japan, Taiwan, Australia, New Zealand, and South Korea. India exported goods worth $77.5 billion to the US and $35.6 billion to the UAE in 2023-24, showed data available from the commerce ministry.

Addressing trade barriers 

India is exploring more mutual recognition agreements with other countries for the AEO programme and is also seeking to extend its benefits to more Indian businesses amid heightened uncertainties in international trade. The US administration, on 10 April, announced a surprise 90-day pause on additional reciprocal tariffs on its trade partners that have not retaliated, including India. 

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The new tariff of 27% on India stands suspended now, but US President Donald Trump said on social media that a substantially reduced tariff of 10% is now effective for these countries. China, which retaliated to US tariff action, now faces an additional tariff of 125%.

Jain said India is keen to have an MRA with the EU as well. “I can say that we must have MRA with the EU also. As of now, we do not have it because the EU wants the FTA before signing the MRA. India is negotiating the FTA with them. Once the FTA is in place, we will also have the MRA," said Jain.

Separately, India is negotiating an MRA with the UK. “Talks are at an advanced stage in the case of the UK. I mentioned about South Africa and Singapore. The UK may be the third one we may be signing very shortly," said Jain. 

“Our AEO programme is 14 years old, and it is a very robust programme. We have around 6,000 AEOs under three tiers and another tier for logistics operators involved in import and export," Jain said. 

The CBIC is holding about 20 outreach programmes every year in different parts of the country, Jain said. The AEO programme implemented under the aegis of the World Customs Organization’s framework for global supply chain security, seeks to step up efficiency in international trade, cut logistics costs for businesses and improve predictability. 

Low enrollment

Despite the tangible benefits, enrolment in the AEO scheme remains relatively low compared to the total number of import-export businesses in India, which exceeds 200,000 active traders, the CII said in a statement shared with Mint on the joint outreach programme.

Regarding the possibility of mutual recognition of the AEO programme by India and China, Jain said, “With China, we do not have an MRA as of now. However, we have a joint action plan with BRICS nations. Under that, we are negotiating with Brazil, South Africa, Russia, and of course, BRICS now has more countries. An MRA with China may also come in due course. As and when it happens, it will be under the BRICS umbrella."

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The CBIC’s DIC is also working closely with other government agencies like the Food Safety and Standards Authority of India (FSSAI) and the Central Drugs Standard Control Organisation (CDSCO) to integrate their clearances into the AEO fast-track framework. This collaboration is expected to further streamline the regulatory environment and reduce dwell time at ports.