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The Central Board of Excise and Customs (CBEC) has prescribed more rigorous processes for imports and exports through couriers. The new requirements follow new regulations to enable electronic filing and processing of Customs declarations by couriers and consequential changes made in the regulations for clearance of courier consignments by filing manual bills of entry/shipping bill.
The couriers have to now furnish a security of Rs 10 lakh for clearance through major international airports of Mumbai, Delhi, Kolkata and Chennai and Rs 5 lakh at other airports. Their net worth or financial viability requirement has also been raised to a minimum Rs 25 lakh worth of assets.
After a transition period of six months, the couriers can file declarations before Customs, for clearance of imported or export goods, only through a person who has passed the examination referred to in Regulation 8 or Regulation 19 of the Customs House Agents Licensing Regulations, 2004, and who is duly authorised under Section 146 of the Customs Act, 1962.
The couriers have to verify the antecedents, identity and functioning of their clients in the address by using independent and authentic documents, data and information. This is to guard against offences such as fraud and duty evasion by bogus IEC holders etc. The ‘Know Your Customer’ guidelines applicable for Customs House Agents will equally apply for couriers.
The couriers cannot outsource or sub-let any of the processes in the door-to-door supply chain to any agency without prior permission of the Customs. For consignments of up to Rs 10,000 in value, the couriers have to obtain necessary authorisation from their clients at the time of delivery of the goods, or earlier. For higher value consignments, they have to get the authorisations at the time of import. For consignments beyond Rs 1 lakh, a normal bill of entry will have to be filed.
The couriers have to put in place verifiable and secure work processes on a global basis backed by an elaborate information technology infrastructure for knowledge and information management. They must have their own in-house mechanism to guard against the use of express supply chain by unscrupulous elements.
CBEC has also given some relaxations for couriers. Transhipment of cargo imported through couriers to another Customs station or transfer of cargo from one Customs area to another within the same Customs station will be allowed. In case of breakdown of computer systems or other unforeseen circumstances, they can file a manual bill of entry and seek quick clearance of consignments. The shipments of export-oriented units have been allowed as the necessary module has been developed under the automated electronic system but the data requirements have been enhanced.
For testing any goods imported by couriers, the Customs have been allowed to send samples to any government-approved laboratory and get the reports quickly. Till the Export Manifest Module is developed under the EDI, the existing procedure being followed in respect of courier regulations for manual mode will continue. The examination norms for export cargo through couriers will be the same as for export through other modes. Couriers already having authorisations from Customs can file electronic declarations without the need for fresh appointment or fresh intimation.
The essence of courier service is speed. The latest CBEC instructions strike a fair balance between need for expediency and safeguards to ensure compliance.
Source: TNC Rajagopalan
The Department of Post is in the process of drafting a new regulation for the postal sector.
This is a necessity since the present act regulating the sector – the Indian Post Office Act 1898 – is outdated.
In fact, the earlier attempt to make an amendment to the Act of 1898 received significant criticism from the courier companies, various ministries and industry associations.
Private companies opposed various provisions of the amendment including use of a weight and price multiple to define a reserved area for India Post in letter and express mail services segments, asking larger companies to contribute to USO funding, proposing a roll-back of the FDI from 100% to 49% and suggesting a regulator for this sector.
While many of these issues are likely to be better addressed in the new regulation the need and the role of the regulator is still a bone of contention.
Over the past few months, ICRIER has been conducting a survey on the express delivery services (EDS)/courier industry to understand the need of a regulator for the industry.
The core issues discussed in the survey include whether the highly competitive EDS/courier industry, with no entry or exit barriers and multiple operators (more than 2500 companies) actually need a regulator.
And, if at all there is a need for the regulator then who should be the regulator and what should be its role and responsibilities.
In India, there is no common view across different segments of the courier/express industry and their clients on regulatory issues. Large express/courier companies felt that EDS should be outside the scope of regulator.
Around 59 per cent of clients did not disagree with the suggestion that government should impose some form of registration/licensing requirement to put a check on fly-by-night service providers.
Smaller courier companies also felt that some form of registration from an independent organisation will provide them security and credibility. However, they differed as to who should be the registering organisation – should it be a central courier association, regional associations, or should they register with an independent regulator?
Most of those who support the proposal for registration argued that it should be one-time registration based on the payment of a nominal fee and should be valid for life-long.
If it is life-long registration then it is difficult to monitor service quality. For ensuring service quality, there should be some basic standards which all companies have to follow and a periodic monitoring mechanism should be in place to ensure that companies compile with that standard.
Such periodic monitoring also entails costs since the number of courier companies is much large.
Moreover, since the courier industry/sector constitute of a large number of small, family-based unorganised companies spread across India, it is difficult to monitor them unlike companies in sectors like telecommunications where there are only a few large corporates.
Overall, the survey found that the cost of registration and monitoring is likely to be higher for smaller companies than larger companies since smaller companies are more localised, they do not have large administrative departments, and/or a mechanised system of regular collection of data/information.
These companies are already operating with tight margins and may have to wind up their operations. Since they are more labour-intensive it can adversely impact employment.
Other arguments from supporters of regulator includes anti-competitive practices, address of consumer grievance, access to network, etc.
The anticompetitive practices can be addressed by the Competition Act. Consumer forums can address consumer grievances and in a sector like courier, consumers have a wide range of choice of service providers. If the service provider does not provide quality services, then customer can easily change service provider and there is no cost associated with such a change.
Tie-ups and strategic alliances are crucial among courier/EDS service providers but, unlike telecommunications, there is no scarce resource which acts as an entry barrier and which can be monopolised.
Thus, the argument for a regulator is weak in case of EDS/courier services.
In this context, it is worth mentioning that the Planning Commission in its draft Regulatory Reforms Bill has proposed a regulator for Post (and not for courier) when the postal sector is liberalised. This is necessary since basic postal services are treated as a “public good” – which has to be made accessible to all and reasonable prices.
In fact, the regulators in most countries have come up with privatisation of the postal sector to regulate any malpractices from the dominant incumbent national postal organisation.
In most countries, EDS is outside the regime of postal regulator. The regulator has to be independent since Department of Posts also has similar express services (Speed Post) like private operators and hence has a vested interest in this sector.
Lastly, while in India some officials seem to want a regulator for each sector, the regulatory experiences have been mixed. The requirement for setting up of an additional infrastructure which entails costs will also have to be justified.
Allocations of all scarce resources do not need a regulator. If competition fails then regulator is justified. So far none of the private courier/EDS companies have raised such concerns.
So, the question is whether there is really is a need to bring a highly competitive EDS/courier sector under the regime of the regulator?
(The views expressed are those of the writers-Arpita Mukherjee (Professor, ICRIER), Ramneet Goswami (Researcher, ICRIER) and Parthapratim Pal (Associate Professor, IIM (Calcutta))
Source: India Blooms News Service