ITC Spells Out Indian Customs Barriers in Trade Report to Congress
The Indian government is increasingly slashing barriers to foreign trade and investment, but U.S. companies continue to face burdensome customs processing and inconsistent, relatively high duties, said the International Trade Commission in a report to Congress, published on Dec. 22 (here). Although the Indian customs regime is improving, customs delays, unreliable valuation and problems with online documentation affect all industries, especially intellectual property-intensive businesses and logistics services, said the ITC.
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The report, based on analysis and a survey of companies, is the first of two the ITC has to send to Congress on India trade policies and practices. The next, due in September 2015, will be a follow-up to this one. Bipartisan leaders in both the Senate Finance and House Ways and Means committees called on India to improve after the report is released (here). That report will cover Indian trade practices since this report.
Foreign companies have long criticized Indian trade barriers. In recent days, a group of U.S. and European producers and traders urged reform in a letter to a high-ranking official (see 1412160041). India ranks roughly in the average of both Asian and lower-middle-income economies among the main indicators for trade facilitation. The U.S. and India broke through an impasse on the World Trade Organization Trade Facilitation Agreement in November, but for months India prevented implementation of the pact (see 1411280027).
Indian customs officials can easily challenge importers’ valuation methods and reassess shipments, and the litigation process to appeal valuation determinations is lengthy and costly, said the agency. The country's customs officials also put one-year bonds on “intra-party” shipments, and use different rules to challenge valuation, said the ITC. Burdensome requirements and some personnel shortages are also regularly holding up goods clearance at land, air and sea ports, the ITC added. India’s online processing forum, the Indian Customs Electronic Commerce/Electronic Data Interchange Gateway, is often slow and dysfunctional, said the ITC.
Indian officials continue to cut tariffs, but agricultural rates have fluctuated significantly and remain high, the ITC said. “Although the United States is a competitive global exporter of a number of agricultural products, such as wheat, corn, soybeans, and meat, few of these exports go to India, in part due to Indian tariff levels. Other factors also limit exports of some of the United States’ main agricultural products, such as the restrictions on genetically modified organisms (GMOs) discussed in chapter 8, and cultural and religious preferences that limit demand for meat. Tariffs, however, do depress the export levels of some products.”
Textile and auto exporters to India also face high tariffs, said the ITC. The Indian tariff schedule itself is complex and policies on exemptions change often, said the agency. Customs officials also charge a set of different taxes at the border, it added.
The National Association of Manufacturers pushed India to improve its trade policies after the report's release. "The ITC’s results confirm what manufacturers have long known – India’s unfair policies increasingly are harming U.S. exports of a wide array of products, costing jobs and growth in both countries," said NAM in a blog post (here). "The results provide a powerful roadmap for change as U.S. and Indian officials continue to work toward stronger bilateral commercial ties through the U.S.-India Trade Policy Forum and the High-Level Working Group on Intellectual Property."