India is planning to enter into Mutual Recognition Agreements (MRAs) with some major trading partners to facilitate safe and faster clearance of Customs’ consignments. Under an MRA, two or more countries agree to recognise one another’s conformity assessments.
Initially, the MRA will be signed with countries with which India has a Customs Mutual Administrative Assistance Agreement (CMAAA). These include the European Union, Israel, Russia, the UK, Hong Kong, Maldives, Uzbekistan, Iran, Egypt, the US, China, Saarc countries, South Korea, Australia and Brazil.
“We are planning to enter into an MRA with these countries to begin with. There we will mutually recognise each other’s security standards,” said a finance ministry official.
CMAAA allows for Customs assistance in terms of documentation and exchange of information between the countries. MRA, on the other hand, is for secure international movement of goods. These have become increasingly common since the formation of the World Trade Organization in 1995.
“MRA is more of diplomatic pursuance and not about sharing of documents. The countries entering into MRA will give preferential treatment to our goods… MRAs are an important part of (an) Authorised Economic Operator (system). We will initiate MRAs once AEO pilots are successful,” the official added.
Under AEO, work on which is expected to start shortly, a party engaged in the international movement of goods would be approved by the Customs authorities as compliant with supply chain security standards, becoming eligible for benefits.
The finance ministry is planning to start the AEO scheme that would simplify customs procedures, reduce intervention, and ensure secure movement of goods between India and other countries.
More From This Section
The finance ministry may begin by doing pilot projects with six exporters. It is planning to roll out the scheme in phases. Initially, it will be voluntary because the revenue department feels it would not be easy for every business to meet the stringent norms, which have high compliance costs.
To be eligible for an AEO, a trader would require a sound record and a good accounting system. He should be financially solvent and whatever activity his company is doing should be completely secure.
Once granted AEO status, businesses will have a recognised quality mark, to indicate their secure role in the international supply chain and that their Customs procedures are efficient and compliant.
This may particularly benefit small businesses, that account for the majority of importers and exporters.