12 hours to 12 minutes: Customs clearance to take the swift route

Topics Customs | imports | Technology

Machine clearance will initially be introduced for select importers
Indian Customs could see consignment clearance time fall from 12 hours to 12 minutes. The government is set to introduce a seamless automated facility with zero human intervention next month, using blockchain, machine learning, and artificial intelligence.


Machine clearance will initially be introduced for select importers; 3,800 of them accredited by the Customs department under the authorised economic operator (AEO) scheme meet the set risk criteria.


They make up for about 40 per cent import volume.


“We are set to unveil a futuristic reform, which will allow machine release of consignments that are perceived risk-free. We will begin by introducing it for AEO members, whom we have accredited. They generally have a good compliance history. The consignments will go through without any officer looking at them,” said a government official.


The move will result in significant savings in cost and time and help further improve India’s ranking in the World Bank’s Ease of Doing Business index. India’s overall rank improved to 63 this year — a leap of 14 positions — and on the ‘trading across borders’ criterion, it improved to 68 — a jump of 12 places.


According to the report, while Mumbai’s Nhava Sheva port takes 82 hours to import, Customs inspection and clearance account for just 12 hours. “Machine clearance will reduce Customs clearance time from 12 hours to just 12 minutes,” said the official.


AEO programme is a trade facilitation scheme and currently offers members reduced examination and inspection, and acceptance of pre-arrival import declarations. They are offered direct port entry, deferred duty payment facility, fast-tracking adjudication, refunds, and risk-based assessment, among others.


The Customs department will use image scanners at airports and X-ray scanners at sea ports to assess cargo, which does not initially qualify for machine clearance and is considered risky. “This will also reduce inspection time significantly for items perceived high risk,” said the official.


The image will be kept as intelligence for future reference to see if there is a correlation. The government will use blockchain technology for this.


Blockchain, the underlying technology for cryptocurrencies, is essentially a distributed ledger that records transactions in sequential blocks, creating encrypted data that can be shared between several parties through the supply chain, and updating them instantly without risk of fraud.


This will do away with the need for physical documents and their processing by Customs officials. Overall, air consignments are cleared the fastest in India, followed by sea, and the slowest being inland containers.


While about 55-60 per cent of air cargo gets cleared in less than 48 hours, only 21 per cent of sea consignments and 15 per cent of inland container consignments get cleared in that time. Around 60 per cent of sea cargo takes more than 72 hours to go past Customs. The government is also examining machine release for exports, by introducing electronic seal (e-seal) at the factory level. “Every container in a factory will have an e-seal, which will be read by e-seal readers at the toll plazas from factories to ports. The profile of exporters and consignment will become clear and could be allowed for automated clearance,” said another official. The fully automated Customs movement will allow the department to better allocate its resources and make judicious use of time of officials. A few European nations, including the UK, use a fully-automated system that offers end-to-end clearance of consignments.

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