Utsarg

The pain of registering an Ad Code every time an exporter used a different port is history! 

CBIC has issued an advisory No: 10/2022 dated June 14, 2022, which was in demand from the trade for a long time.

Multiple ports multiple AD-code registrations, delays in export for not having the AD-code registered at the port and many such pains of exporters have been addressed in the advisory. 

Trade demanded that the AD code had to be registered only once in the Customs for all the port locations, and not every time they used a different port for operations.

Previously, it was mandatory to register the AD Code at every port the document had to be filed. There could be 1 or many AD codes associated with one IEC code at various ports. A whole bunch of documents with KYC and bank letters had to be submitted to each port to register the AD code. Even after the submission of documents, it was at the discretion of the port officer to accept or ask for further documents or reject the registration as a whole.

Now, the Ad code has to be registered at only one port, and thereafter the details would be available to all EDI systems at any port in India. If in case the exporter needs to update the details they can do so through an online request from the ICEGATE portal by logging in to their account. The same AD Code can be used for filling the documents on all the ports. There can still be multiple AD Codes and accounts registered for one IEC, but all of them have to be registered in any one of the ports.

What happens to the existing registered AD codes? Is there Anything exporters need to do?

No, for all existing AD code(s) and associated accounts registered for an IEC, the Customs port, where the last Shipping Bill with a particular AD code was filed, will be taken as the port of registration for that AD code in the System.

Thanks for reading, you can write to us with your suggestions at [email protected].

India records the highest-ever monthly exports at $37 billion in December 2021. Indian market sentiments continue to be strong across the regions. 

Exporters are overwhelmed with the number of inquiries and new purchase orders as the backlog of global shortage have still not been fulfilled.

The most in-demand sector still remain -

Engineering products

Gems and Jewellery

Merchandises

Lifestyle products

Indian manufacturers are standing strong and have kept their unit swing at full capacity to meet the holiday demand from the west (exports start moving in huge volumes from the beginning of Q3 of the financial year).

The market is still tight and the demand for goods all across the globe is at the highest level. 

“Sold out” had become very common in the stores of west and e-commerce site. ”I was asked to wait one year for my treadmill,” said a consumer who wanted to buy a treadmill in the US.

Is Omicron a threat?

Omicron has been rapidly spreading across nations especially in the US, European nations, and West Asia.

As far as the threat and effect from the Omicron variant are concerned, there could be small disruption but the demand for goods will still persist. Experts are predicting that there can be a minor disruption in the supply chain due to lockdowns across the globe.

What’s in for you?

There is a huge opportunity for existing as well as new entrepreneurs to dive into the manufacturing and export business and take full advantage of the current demand-supply gap existing in the international market.

Buckling up on international marketing and sales could fetch you, new clients, and give a boost to your existing business.

Things have gone totally south in terms of the number of Covid cases in India. The total number of people affected till date has crossed approximately 2crore in numbers.

The death rate has gone up to 3.5k people daily. Major cause of death is stated to be respiratory organ failure.

There is a huge shortage of oxygen cylinder and oxygen concentrator round the globe, majorly in various cities in India.

China and many other countries like Russia have major manufacturing units to fulfil the global demand.

Personal, business or donation, there could be various reasons for you to import oxygen concentrators. This guide will answer all the questions for you on how you can Import oxygen concentrator in India -

Step 1: Finding the right supplier

Finding the right supplier for your oxygen concentrator is an important first step. Medical equipment has to be of high standards as it becomes a matter of life or death for the end user. You need to find an authentic and trustworthy supplier to buy the goods from. There are a number of e-commerce websites like Alibaba which may help you with this process.

Step 2: Paying for the goods

Once you have finalised the goods and negotiations are completed, you would then need to pay the supplier. There are a number of ways you can pay them. Methods like direct remittance are more preferable to the supplier. If it’s the first time you are working with them we would recommend you to pay the supplier with Alibaba trade assurance.

Step 3: Finding the right Freight Forwarder

Once the goods are ready you would need a trusted logistics freight forwarder to book cargo space and get your goods moving from the warehouse of the shipper to your address.The freight forwarder will make sure that the goods are customs cleared on both ends and provide you smooth and fast delivery of the goods. 

Nearly all importers (whose cargo were scheduled to arrive between 1st April to 3rd April)  had to pay huge penalties due to lack of clarity on the circular  (Circular No.08 /2021-Customs)  issued on 29th of March by the Government of India, Ministry of Finance.

The government issued the circular last minute and many CHA and freight forwarders didn’t have time to read and understand the implications of the circular.

People in the trade are still confused as to what's happening around and the real facts with concrete sources.

We have come out with a detailed note and bullet points for the important things mentioned in the circular that can save you the hefty penalties for all your future trade.

1. Bill of entry needs to be filed before the last day of Vessel/Flight arrival - It is now important that you as an importer share all the documents to your freight forwarder or customs house agent well in advance. 

To speed up the clearance process the Government of India has made it mandatory for all the CHA’s to file the Bill of Entry before the last day when the vessel or flight arrives. Hefty penalties have been imposed if not done so, take reference from the below slab - 

A penalty of 5000 INR/day from 1st to 3rd day

After 3rd day 10000 INR/day

2. The free demurrage period at the airport is reduced to 48 hrs instead of 72 hrs (public holidays excluded)

We all know the pain of paying extra ground rent as demurrage to the airport authority. The free period at the airport to take delivery of the goods has been reduced to 48 hrs instead of 72 hrs. This can come out as an extra cost to importers, as there are times when the clearance process takes longer than average.

3. Import duty should be paid within 24hrs of BOE filed

As soon as the Customs assessment of the cargo has been done, the BOE is issued which mentions the duty amount of the goods. It is now mandatory for importers to pay the duty amount within 24 hours of the Bill of entry generation else an interest of 15% pa (0.041%/day) on duty will be charged and needs to be paid whenever the duty is paid.

4. BOE can now be filed with a HAWB 

The only point which goes in our favour. Previously the filing of BOE used to wait because of the unavailability of MAWB/MBL (the delay in getting the Master copies from Airlines and Shipping lines). But, now CHA would be able to file the bill of entry with the help of HAWB/HBL also.

5. Update or Validate KYC details

Though this point is not mentioned in the circular and is a part of a different notification (Notification No. 58/2015-2020) we thought it would be relevant to put it here. It is now important for every IEC holder to update or validate the details associated with the IEC from April to June every year else the IEC would be deactivated.

In a nutshell 

Several steps are being taken in order to achieve a quick clearance process at the port, the question is at what cost? There are many shipments which get stuck because of multiple queries raised by a customs officer. Even after the query is replied they may take a day to process the checklist. This in turn increases the demurrage charges at the airport and increases the cost of the goods for the importers.

Container Ship Ever Given Stranded at Suez Canal Finally Refloats

A container ship on its way to Rotterdam got stranded at the Suez Canal in Egypt on 23rd March 2021. The ship “Ever Given” remained stuck for nearly 6 days at one of the busiest shipping routes in the world. Due to this blockage, almost 350 ships, carrying cargo worth billions were piled up in the traffic or were forced to re-route. The incident sparked fresh anxiety over the state of global trade in the next few days. 

Ever Given is one among the world’s largest container ships. The ship was horizontally wedged across the banks of the canal following a windstorm. Almost about the size of a skyscraper, it was carrying 18,300 containers at the time it ran aground in the Suez Canal.

 As discussed in the previous blogs, the world is already dealing with a container imbalance crisis. In such a situation, a delay of even a single day in delivering and returning containers is an added problem. The blockage has aggravated this imbalance and there is a ripple effect on container trade. 

More than 30 oil tankers were lined up on both sides of the blockage for passing by. The delay nearly doubled the shipping rate for oil product tankers. We might also expect the freight rates to increase soon.

Due to the blockage, many ships have rerouted via Cape of Good Hope to avoid getting into the traffic. However this diversion will take the ships 7-10 days longer to reach their destination. A huge fuel bill has been added for opting this alternative route, increasing the shipping charges sharply.

Rigorous attempts had been adopted to free Ever Given. Salvage teams deployed 10 tugboats and workers were dredging the banks and seafloor near the vessel's bow to get it afloat again. 

After a week, the vessel was finally refloated on March 29. The critical trade artery between the Mediterranean Sea and the Red Sea is now viable. 

While the ships in line have begun to pass through the canal, some of the vessels have been ordered to slow down to prevent a fresh backlog of ships if too many ships arrive at once. 

But what’s in it for you and me? Practically speaking, traffic jams are common phenomena when on-roads. But when a maritime traffic of this scale builds up on either side of a ship, it is massive and takes several days to clear the backlog. The disruption in shipping lines has a far reaching impact.

The container vessels passing through this narrow channel linking Europe and Asia account for roughly 12% of global trade. Delay in movement of the shipments result in extended supply chain and trade loss of an estimated $6.7 million per minute. This makes upto $9 billion per day. 

Under normal circumstances, it is much cheaper to transport your goods via ocean freight. Although delays may add to the shipping charges, this mode would still remain more economical than others.

 This incident having occurred once, it is expected that the Suez Canal authorities will investigate into the causes and take steps to greatly lessen the possibility of a repeat channel blockage in future. 

About 50 ships pass through the Canal each day, with the alternative voyage requiring sailing around the Cape of Good Hope. That's another 3, 500 nautical miles for the journey that everyone would rather avoid. After a week, Evergreen was finally released, which is good news for everyone

If you have ever traveled by train, you might as well have seen cargo-laden carriages, making appearances across the adjacent railway tracks. While you must have sat and pondered into what good any of these are, here's an insight into the long and short of freight trains. 

Whether you're a small trader seeking your cargo to be transported in a cost-effective manner or a big business house, railway freight is a convenient option. With an extremely well-connected network throughout the country, railways are among the safest and most energy-efficient modes of transportation. For long-distance transmission, shipping large quantity products by rail remains much cheaper than transport by trucks. You can check scheduled movement for your cargo, track it easily and get advanced support for all your concerns.

Primarily, what can be transported via railway freight?

Almost everything imaginable. Trains may haul bulk materials like coal, cement, fertilisers, intermodal containers, specialised cargoes, petroleum products, and even natural gas. If you're thinking of airplane fuselages or construction equipment, railway transport facilitates that too!

Advancements

Growth:

Railway freight transport has come a long way. Freight operations contribute nearly 60% of the railways' revenue. Today, Indian Railways' Freight Services boasts carrying more than 1.2 Billion tonnes of freight traffic every year. Despite the covid-19 situation, freight loading by Indian Railways has surpassed last year's numbers by a whopping .7 million tonnes.

Rates and Speed:

This efficient land transportation system has been offering incentives and discounts lately to boost the engine of growth. The average speed of the freight trains has also been nearly doubled to facilitate timely delivery of goods. A couple of newly developed freight-friendly policies have further been instrumental in promoting higher transport of commodities.

Online Processes:

Indian Railways under the ministry of Piyush Goyal had recently launched the “Freight Business Developmental Portal” - an online facility to ensure hassle-free processes for goods transportation services. The initiative aims at providing a one-stop cargo solution for seamless goods transportation by rail. Several other freight-friendly policies had earlier been implemented in the form of Vyapar Mala Express, Kisan Rail, etc. to offer simplified logistical support to the needs of freight customers. The Premium Indent Policy (PIP) is another move to augment the railway logistics sector.

Iron-Ore, Land Licensing Fee Policies:

A new iron ore policy governing the transportation of iron-ore and allocation of rakes has also been issued by the Indian Railways, under which higher priority will be given to the movement of iron-ore traffic for domestic manufacturing activities. The Land Licensing Fee policy, which is soon to get approval from the Union Cabinet, will apply to Container Corporation of India (CONCOR), and other private container train operators setting up terminals on land leased from Indian Railways. This step will encourage the commercial use of the surplus land and boost investor interest in Concor.

New Project for Future:

An exclusive plan by the Indian Railways is the addition of 350-400 km of Dedicated Freight Corridor, which is a complete revolution in the railway freight history. DFCs will ensure dedicated lines for the movement of rail freight, thereby prioritising the movement of goods trains. Once the project is completed, nearly 70% of the freight trains will be transferred on the DFCCIL network which will help in the timely movement of cargo in the future.

Over the years, there has been a dramatic increase in ocean freight. Almost 85% of the global trade today is through container ships which serve as the most preferred method of transportation because of their economic viability. 

However, amid the overwhelming popularity of ocean freight, a major concern has also started bothering traders post the pandemic - the container shortage crisis. 

In January 2021, the industrial activities surged and there was a reported increase in demand for the export of items like rice, sugar, wheat, and drugs and pharmaceuticals. But while the quantum of exports grew, it could not be well attended owing to the shortage in availability of containers for shipping. A possible explanation for this is the disruption in the supply chain post-Covid-19. Most of the containers are being prioritised for long-haul shipments, while others are piling up at already congested transhipment ports under the indirect repercussions of the pandemic. This has hampered the timely export and left the trade at the mercy of the availability of containers.

At present, India imports a bulk of its requirement of cargo containers mostly from China- the global leader in container production. There are no domestic production units that manufacture such containers in India on a large scale or at cheap prices. The locally-made containers are pricier by about 25% compared to the ones imported from China.

While the container shortage crisis is expected to ease by mid-2021, it is in the better interest of the country’s trade that a long-term strategy is developed to deal with it. A feasibility study has already been commissioned for making containers in Bhavnagar, Gujarat as a move towards Atmanirbhar Bharat.

As per the latest reports, the Container Corporation of India (CONCOR), the leader in the container movements market has supported the idea of indigenous manufacturing of cargo containers. Braithwaite, a unit under the Indian Railways, and Bharat Heavy Electricals Ltd.(BHEL), a PSU under the Ministry of Heavy Industries, have been the ones to receive developmental orders from CONCOR for producing 1000 containers each.

Further, a tender for 6000 more containers will be issued soon. 

It has also been emphasised that the containers are expected to be GPS-equipped to aid tracking. This would provide better logistical support while cutting short the dependency on China at the same time.

The end of MEIS scheme came as a shock to the Indian exporters.

But why did this happen?

US filed a complaint against the MEIS scheme at the WTO, stating that the Government of India is providing undue benefits to the Indian exporters from this scheme. India lost the case and had to withdraw the MEIS scheme to be compliant with the world trade organisation. Huge disappointment..isn’t it?

Government of India approved the RoDTEP scheme which went effective from January 2021. How is it different from the MEIS scheme? Let’s find out.

The RoDTEP scheme allows for reimbursement of the taxes/ duties/ levies, embedded at the central, state and local level. All such indirect taxes incurred in the process of manufacture and distribution of exported products were so far not being exempted or refunded under any other mechanism or existing scheme.

With an aim to promote India's exports and to make them more competitive in the global market the government of India has made sure that the scheme provides decent benefits and also comply with the world trade organisation.

This scheme falls in line with the WTO rules, which allow certain duties like state taxes on power, oil, water, and education cess to be refunded.

Earlier, the incentives were provided in the form of transferable Scrips (Hardcopy/ downloadable). The new scheme aims at creating an electronic credit ledger in the Customs System whereby the incentives will be maintained in the form of transferable duty credit/ electronic scrip.

The refund/reimbursements would be credited in the exporter's account with Customs and can be used to pay Basic Customs duty on imported goods. The credits can also be transferred to other importers similar to the scrips issued under MEIS/SEIS. The plan will facilitate a fully automated procedure for ITC in GST and avoid double taxation.

The refund will be calculated on the FOB value of the exported goods. The rates will vary product by product.

Good thing?

RoDTEP allows the refund of all the taxes which were disallowed like taxes on fuel, toll tax etc

Better and digitalise way to manage tax credits for the exporters

Bad thing?

As the fear and havoc of the pandemic set into motion in March last year eases, can it be said that a more stringent lockdown still beckons and if so, how will the traders get impacted again?

Even though the world has only now woken up to this variant, businesses and traders have been going through a tough time since quite a while now. 

The virus is proceeding in waves, with countries succumbing – and set to recover – at different times. What is clear is that the virus and its aftermath looks likely to be with us for some time.

How will be the EXIM industry affected?

Speaking of exports and imports, while lockdown for corona 2.0 could see an inflow of essential goods (with a slight uptick of around 1%), the inflow of non-essential and luxury goods could fall by around 18% and 35% respectively.

The shipping industry remains one of the most crucial components of international trade. With the arrival of the new covid-19 strain and chances of lockdown, possible economic pain, the sector could suffer enormously. 

Apart from the depressing supply and demand globally, shipping lines have also been forced to alter their ports of call because of coronavirus-related restrictions imposed by multiple countries. 

The industry has further suffered from stockpiling of containers at certain ports, including India, as local supply chains have broken down around the world.

With staggering gaps in international logistics and supply chains, it is unlikely that global trade will be able to rebound to its pre-COVID-levels anytime soon. This poses new challenges for India’s exports and may require the country’s stakeholders to reevaluate their vision for the sector.

Aviation has always been a business with very less or no margin. Several airline firms are under heavy debt or have been incurring perpetual losses. To make the situation worse, the pandemic has brought international travel to a standstill.

In a situation like this, airlines had no option but to switch to carrying cargo to support the loss they were already incurring. The pandemic might have brought national and international flying to a halt, online buying of commodities have seen a huge rise during this time. Several e-commerce platforms rely a lot on air freights to make their cargo reach their destination in time. However, there is a limited number of freight aircraft specially designed for logistics. 

The demand for air shipping was fulfilled by passenger planes where the cargo was tossed in the bellies of these aircraft and carried to their destination.

With the passenger service restricted, the number of flying planes carrying passengers was reduced.

To save the airline from incurring more and more losses, the aviation companies started restructuring their planes to carry more cargo. Interestingly, the aviation industry saw lesser losses than they had estimated. 

The government and private pharmaceutical and e-commerce companies were ready to pay a premium to get their goods transported on an urgent basis.

The E-commerce websites also had their biggest sale of the season, attributing to the festival period and the inclination of buying goods and commodities from the safely of their homes. 

Thus, air freights stood out as the hero of the pandemic time, serving the needs and desires of humanity at the same time saving the aviation industry.

The domestic aviation companies were eager to convert the opportunity in their favor. Spicejet and Indigo readily re-modeled some of their passenger aircraft into cargo airplanes to make full use of the advantages of the pandemic situation.

Most of the cargo operations in India (above 85%) were handled by foreign freight carriers. The Government of India stepped in and restricted foreign carriers from flying across some of the selected routes. This allowed the Indian firms to get a good ground and loop in profit.

The Show must go on. When the entire world tries to recover from the pandemic, the air-freights have kept the game going. 

With the world turning into a Global Village through the Liberalization of Trade, exports and imports have flourished. In the 21st Century, exporting and importing is all about stacking the containers, clearing the required papers, and setting the ship afloat for its destination.

However, there have been reports that container prices to countries like America and Africa have more than doubled in the last couple of weeks, the reason being- Container Imbalance. 

The world has a fixed number of containers that are in use for exports and imports. When the goods are in transit, the vessel carries the exported goods to the importing country. Again the importing country uses that container to re-export goods. As a result, a constant inflow and outflow of the vessels are in balance, and no country faces any deficit or surplus of containers.

However, COVID has brought about unforeseen situations in International trading. Most countries had closed their borders for trading due to the pandemic. As a result, the flow of containers had stopped. With the gradual resumption of transactions, countries like India have a lot of goods lined up for exporting. According to Maersk, Indian exports in terms of volume grew 24% from a year earlier, even as imports reduced by 28%. The importing countries do not have enough ready products to send back. Hence, while India is facing a container deficit, some other country or countries have a container surplus.

This phenomenon is called container- imbalance.

For managing this drawback, containers have to be empty to countries with a deficiency in vessels to keep up the flow. Shipping empty containers imply incurring huge expenses without any returns. Moreover, if containers are lying idle in the dockyard, it attracts heavy expense too. To compensate for all these extra expenses, there is no option but to increase the price of containers.

Now the million-dollar question: If a country like India is facing a container deficit, then there must be some other countries that have containers in surplus. 

Which is that country?

China happens to be the country with the container surplus. When the entire world was falling sick to the Virus, China was reopening its doors for trade. Adding to it, China’s actions at Indian borders propelled India to bring strong restrictions on trade with China. As a result, the containers which were shipped to China could not be shipped back to India.

US has only 5% of the total world population, but why is there so much of noise about the US Election? 

Main reason behind this could be the control of US over 20% of the World Economy.

Recent years have seen an appreciable demonstration of friendship between the current President of United States of America, Mr. Donald Trump, and the present Prime Minister of India, Shri. Narendra Modi. In FY 2019-20, the US India bilateral trade stood at an astounding $88.75 billion. With that US also became the top exporting country for India.

In February, Mr. Trump, on a very animated trip to India had remarked that India had put tariffs on American imported goods and he wanted to negotiate regarding the same with New Delhi. However, he also added that Modi was a “tough negotiator”. Such a reaction was probably the cause of India taking up protectionist policies. Now, there have been mixed reactions on whether India would stand to gain or lose depending on the results of the US Election.

If Trump wins the election, India would surely reap the advantage of the good relations between their political leaders. Moreover, both Modi and Trump have openly expressed their discontent with China. Both countries have discouraged trade with China. Trump kept calling the Corona Virus the Wuhan Virus and both countries have banned Chinese investments (Huawei) and apps (like Tiktok).

On the other hand, many feel that Biden, given the diplomat he is, would believe in maintaining good relations with the strategically located Asian countries like India and Japan but at the same time try to distill benefits from China. In some of his interviews, he even hinted at removing the tariffs from Chinese Goods that have been imposed by the Government.

However, in the recent scenario, Biden is expected to follow a strategy of expansion with a focus on Bilateral Trade with India, resulting from the recent hatred towards China being the source of the Global Pandemic.

Faceless Customs Clearance - A Blessing or an Agony

Central Board of Indirect Taxes and Customs (CBIC) introduced the faceless, paperless, and contactless Custom Clearance Process under the “Turant Customs” program.  This process would be an anonymous assessment process, automated clearance of bills of entry, and digitisation of the necessary Custom papers and documents.

We might think that automation and digitisation of Customs processes would help in reducing corruption and would supposedly make the process easy and seamless. However, Freight Forwarders have a different story to tell.

Before moving to the nitty-gritty of the Faceless Assessment Process, we need to know how this process came into existence and who would be in charge of running the system.

The customs process automation started in the year 2005 and aimed at the non-personnel clearance of 80% of the imports being made. The faceless clearance assessment process applies to the remaining 20% of the imports.

The faceless assessment would be available at all importing ports of the country and would be a centralised process. A particular freight would be assigned to an anonymous clearing officer by the software system, who would undertake the process of assessing the freight.

This program is going to be handled by the Directorate General of Analytics and Risk Management, Government of India.

The advantages you ask?

As we have already pointed out, it would reduce the extensive corruption in the world of Custom Clearance. Not knowing the customs officer would cut down a lot of unaccounted transactions. The digitisation would make the process smart and savvy. Data, being stored in the electronic format would help in several analyses and surveys which would help in better quality assessment and keep the system in sync.

Two sides of a coin!

The import and export business is more complex than it looks. The trade runs on the immaculate management of space and time, supported by a top-notch supply chain. For a country with a steady mentality, changes are not readily welcomed. The digitised faceless process has resulted in a significant increase of delay, mainly because of anonymous clearance officers who know nothing about the clearing agent.

Putting it this way, every importing port so long had its dedicated clearing officers and clearing agents. There was a sense of acquaintance and the officers used to respect the goodwill of the better clearing agents whom they knew had their papers clear. However, when the same clearance task started getting assigned to an officer from a different part of the country, it became necessary for him to go through the entire assessment process of checking all the papers. Thus, instead of reducing time, the faceless process became more time-consuming. 

In the import-export business, time is money. A cargo sitting at the dock for a day or two would attract heavy demurrage, thus increasing the cost and pulling back the profit margins of firms.

Though many critics have criticised this faceless process openly, many believe that the new process is a positive change the clearance officers are purposefully delaying the process for you know what reasons.

In a nutshell

India still has a long way to go before it becomes completely digital. What our leaders might have to find is the right blend between the online and offline processes. As our Prime minister rightly said, “India, with the right blend of the physical and the virtual, can emerge as the global nerve center of complex modern multinational supply chains in the post-Covid-19 world.”

The crisis that the pandemic has brought upon us can be coped up with if we become more self-reliant than they have ever been before.

Measures are being taken to improve individual quality and strengthen the supply chain. 

We, as Indian citizens, must not only depend solely on local and ‘swadeshi’ products but also encourage, promote, avail and be vocal regarding local products and services. 

Keeping these factors in mind on the 12th of May, our Prime Minister Shri Narendra Modi launched constructive, practical and pliable policies to make our country an effective part of the global economy. 

He announced a special economic package equivalent to 10% of India’s GDP ~ Rs.20 lakh crore.

What difference did it make?

The campaign has provided a boost to local manufacturing. Indian products and services are gradually replacing the imported ones. 

This has not only encouraged entrepreneur minds to come up with innovative and captivating business ideas but also has made the possibility of a hike in the number of exports look seemingly solid.

Electronics, medicinal drugs and labour-intensive sectors (such as leather, textile and food processing) are proving to be our greatest beneficiaries. 

Because of the policy, a central focus has shifted to supply chains, towards the provision of fiscal incentives for value addition, cheap labour and thus towards exercising restrictions on import. Import-substitution is in practice and our enormous consumer market is providing to be our greatest strength.

The Merchandise Export Incentive Scheme (MEIS), our most prominent export incentive scheme has expired, making way for better schemes that are supposedly brewing hot.

The government has identified 12 sectors in which our country can become a self-reliant global manufacturer and supplier. They include food processing, organic farming, iron, aluminium, copper, agrochemicals, electronics, industrial machinery, furniture, leather and shoes, auto parts, textiles and coveralls, masks, sanitisers and ventilators.

In a nutshell

In recent days, India and China are on a path to ease out border tensions that escalated about a month ago. In the aftermath of the standoff, a call for a boycott of Chinese goods and services was triggered on the economic front.

In terms of trade numbers, China is the second-largest trade partner of India and we run a huge trade deficit with it. In the financial year 2019-2020, China accounted for about 5% of India’s total exports and about 14% of the imports.

Amid these tensions, several people wanted a complete ban on the import of Chinese goods while some were more inclined towards achieving the long-time goal of ‘Atmanirbhar Bharat’.

Alongside all this, a big problem was brewing at Indian ports. Imports from China were being held back at ports as customs officials were withholding all inward consignments from China. Although this problem only lasted for a couple of weeks, it created huge congestion of goods at several ports of India.

How are the conditions now?

Quite honestly, things have got better and goods are moving at a swift pace. In some of the ports, there is still a problem of congestion but it is expected that all will go back to normal within a month. Or will it?

As mentioned above, the border tension between India and China is being eased out. Everyone is expecting that in the coming few months, things will go back to normal as it happened at Dokhlam in 2017.

Adding to that, building a ‘Trade Wall’ is not that simple today. If any such decision is taken, India is sure to feel the wrath of the World Trade Organization and other trade unions.

Also, straightaway banning all Chinese good may hit China on an Economic front but it will surely hit India on a large scale too.

“Stopping Chinese imports could result in huge losses for Indian businesses that placed orders before the border clashes even happened.” – said Nitin Gadkari recently.

All this simply points out to the fact that on the short-run, it will be quite difficult to halt imports from China. On the long-run, well, we will have to wait and watch.

To sum it all up, the clearing of inbound goods from China that was held up at Indian ports has been expedited. Congestion is easing up and goods are moving at a swift pace. On the whole, things are starting to look better.

No one is alien to the fact that tensions between India and China are growing since the past few weeks.

How has this tension affected the trade between the two countries? Let’s find out.

First, we need to understand the trade statistics between India and China. In the financial year 2019-2020, China accounted for about 5% of India’s total exports and about 14% of the imports. This data clearly shows that India runs a huge trade deficit with China and is also heavily dependent on China for many goods.

Coming back to today, there is a huge problem brewing at Indian ports. A large volume of goods is being held back at ports as customs officials are withholding inward consignments from China.

The reason behind this – Nobody knows.

Many reasons are floating around but the ‘Department of Commerce & Revenue’ is saying that no such orders have been released regarding the imports from China. There is no explicit order regarding the restrictions and heavy inspection of inbound Chinese shipments. To quote the department, “If in certain cases, some containers are held up, then it may be based on specific intelligence inputs about suspected materials, etc, and on risk assessment, which is a routine exercise.”

Everyone knows that India is looking to retaliate against China on the economic front. Many people feel that India should straightway ban all Chinese imports. Rule of thumb states that in these matters, an official order would have been highly effective.

What went wrong? 

In simple words, building a ‘Trade Wall’ is not that simple today. If any such decision is taken, India is sure to feel the wrath of the World Trade Organization and other trade unions. Withholding and delaying inward shipments is a much simpler way to discourage importers.

Coming to the actual effect, the delaying of goods can hurt China on the economic front but it will hurt India too. In the beginning, we mentioned the volume of trade associated with China and putting a stop to it straightaway will surely hurt India.

“Stopping Chinese imports could result in huge losses for Indian businesses that placed orders before the border clashes even happened.” – said Nitin Gadkari recently.

Let’s crunch some more numbers. According to official data, we import about 45% of our electronics from China, 40% of our chemicals, 30% of machinery and 25% automotive parts. Any disruption would lead to a catastrophic failure of the supply chain in these fields.

Some examples you ask?

The electronics that we use, i.e., smartphones, laptops, TVs, etc., are mostly imported from China. Even the products that are manufactured in India require some component or the other from China.

Let’s come to the automobile industry. A statement from the president of ACMA is enough to understand the point. “The automotive value chain is a highly complex, integrated and interdependent one; non-availability of even a single component can, in fact, lead to stoppage of the vehicle manufacturing lines.”

In recent times, Pharmaceuticals have been in the limelight. We boast that India exports a large volume of pharmaceuticals globally. That being true, it should also be mentioned that India imports most of the raw materials from China. Crucial medical equipment – IR thermometers, PPE kits, pulse oximeters, etc., that we need to fight the ongoing COVID-19 pandemic are mostly being imported from China.

To sum it all up, things are getting better since a past week. Customs has started to expedite the clearing of Chinese goods stuck at different ports for the last 10 days. The strict physical examination has also been eased throughout India and we expect things to get back on track within a week or so.

We agree to the point that India has to become ‘Atmanirbhar’, but it is a very long race. The government has to be sure that in our bid to hurt China, we don’t hurt ourselves more.

We can either call it Lockdown 5.0 or Unlock 1.0, but slowly and steadily, India is learning the ‘new normal’.

What does this mean for the sector of Foreign Trade in India?

In this 3 minute read, we have summed up all the details and statistics regarding the Foreign Trade Sector of India.

First, let’s go back to square one. The first lockdown was imposed on 25th March and India came to a standstill. Speaking of Foreign Trade, many hiccups were faced during the initial stages but things started to move to a positive note as time progressed. Simply speaking, the Government tried to ease the complete process of Import & Export but whether the decisions were good or bad, we leave it up to you to decide.

Coming to the details and statistics, here are the ones we have summed up.

Normal Import and Export of goods started picking up pace during early May: Traders and Manufactures all over India resumed their dealings of Foreign Trade when some restrictions started to get lifted and the Government eased some regulations.

Import of items related to COVID-19: Products related to COVID-19 are being imported on a large scale in India. These include masks, ventilators, PPE kits, flip bottle caps, gloves, sanitary mops and many other products. It is estimated that about 2 Billion Dollars’ worth of masks have been imported in India till May.

The Plunge of Exports: Indian exports declined 60% during April. Out of 30 major sectors, 28 sectors registered a negative growth regarding Exports. The two sectors which held up were the Iron ore sector and the pharmaceuticals sector.

India set to export 1 Billion Dollars’ worth of (non-medical & non-surgical) Masks: With the Government allowing the export of non-medical and non-surgical masks, India is expected to emerge as one of the main countries to export masks. The Apparel Export Promotion Council has mentioned that India can export $1 billion worth non-medical, non-surgical masks in three months.

In a Nut-Shell