India is a signatory to the WTO's Agreement on Trade Facilitation
By Arpita Mukherjee and Soham Sinha
The Customs, in Mumbai airport, cited the Courier Imports and Exports (Electronic Data and Processing) Regulations, 2010, to ban all perishables through the courier or fast-track route in December 2018. This led to a sudden stop in clearances of blood samples for testing, access to key medicines for patients, exports and imports of food samples for test marketing and display in exhibitions, to name a few. After complaints by the industry and review of the adverse impact, the Customs, in February 2019, allowed courier companies to transport blood samples, subject to requisite clearances by other government departments. Such measures have not only resulted in India’s low rank in the World Bank’s Logistics Performance Index compared with countries like China, it has led to huge business losses also. The Indian express and courier industry employed around 1.6 million workers and contributed close to Rs 3,000 crore to the exchequer in FY18.
India is a signatory to the WTO’s Agreement on Trade Facilitation. Article 7, Section 8 of that agreement on “Expedited Shipments” calls for member states to “adopt or maintain procedures allowing for the expedited release of at least those goods entered through air cargo facilities”. Thus, the ban seems to be against India’s position in the WTO. Further, while Mumbai airport maintained the restrictions on “perishable” cargo, the same was getting cleared in Delhi airport, showing a lack of uniformity in the clearance processes.
The root cause of this confusion and restrictions on perishable cargo clearance through the fast track route is that laws governing the movement of goods through the air cargo route were initially governed by the Courier Exports and Imports (Clearance) Regulations, 1998. Back then, airports lacked the basic infrastructure to support the handling and storing of “perishables” and therefore the movement of perishables via the air cargo route was banned. However, today Indian airports have the requisite infrastructure. The Courier Imports and Exports (Electronic Data and Processing) Regulations, 2010 (an amendment to the 1998 regulation) continues to ban the movement of “perishables” via the air cargo route, which was an oversight at that time by both the industry and regulator. The issue received attention when the Office of the Commissioner of Customs (at the Mumbai Airport Special Cargo Commissionerate) issued a standing order banning the movement of perishables, based on a definition which is doesn’t correspond with any globally approved definition of perishables. The order stated that goods classified as “perishables” require testing and clearances by the requisite government bodies such as the Food Safety and Standards Authority of India (FSSAI). Therefore, their import should not be allowed as gifts or samples through the courier mode. The FSSAI’s Import Regulation, 2017, clearly lays down the process of food import for both commercial and non-commercial use, exhibition, research purposes, etc, and once the requirements are adhered to, there should not be any discrimination across the different modes through which the product is transported, i.e, logistics air cargo versus express air cargo.
It is important that all consignments through any route should adhere to due diligence. The benefit of express cargo is that it is fast-track and offers an integrated service to the client vis-a-vis logistics. As India is implementing trade facilitation and is trying to improve ease of doing business, it is important to amend the 2010 regulation and allow the entry of perishable cargo through the fast-track route. There is also a need to have a robust back-end IT infrastructure which will link Customs with other clearance agencies such as FSSAI. If this is done, India will not only improve its rank in cross-country comparative indices but logistics costs of doing business will decline significantly.
Mukherjee is professor, and Sinha is research assistant, ICRIER