India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

Customs Procedures
<strong>India</strong> has put into place many <strong>of</strong> the characteristics <strong>of</strong> a modern customs clearance
process, which should enhance speedy <strong>and</strong> low-cost importation <strong>of</strong> all products. 59 Several
<strong>of</strong> the advances that <strong>India</strong> has implemented, however, have less effect on agricultural
imports, including those from the United States, entry for which requires additional
approvals, an out-<strong>of</strong>-transaction reference valuation, or both.
For example, the h<strong>and</strong>lers <strong>of</strong> import documents for agricultural imports must obtain any
necessary health <strong>and</strong> sanitary certificates, or import permits for goods under restriction,
prior to import <strong>and</strong> must submit them with the customs declaration, adding to the time
required for import transactions even prior to entry <strong>and</strong> placing a premium on customs
operational efficiency. 60 Furthermore, one <strong>India</strong>n industry representative stated that if the
agricultural imports require an SPS certificate, the transaction may be delayed while
parties wait for an SPS <strong>of</strong>ficer to arrive <strong>and</strong> process the necessary paperwork
personally. 61 Delays from inefficiently h<strong>and</strong>led or excessive documentation requirements
can lead to storage <strong>and</strong> loss costs for the exporter. 62
Except for the launching <strong>of</strong> the National Import Database in 2002, <strong>India</strong>’s customs
valuation procedures have changed little since the September 2001 amendments to the
1998 Customs Valuation (Determination <strong>of</strong> Price <strong>of</strong> Imported Goods) Rules, which at
first glance accord with international norms. However, as described in chapter 5, those
rules do not cover valuation for all major <strong>India</strong>n agricultural product imports. <strong>India</strong> uses
reference prices for edible oils to determine the value <strong>of</strong> imports <strong>and</strong> applicable duties. 63
<strong>India</strong>n customs <strong>of</strong>ficials have sometimes rejected the declared value <strong>of</strong> soybean oil
imports from the United States, for example, because they believe the price to be lower
than market prices. The higher reference prices used by <strong>India</strong>n customs <strong>of</strong>ficials
effectively increase the amount <strong>of</strong> duty owed on the transaction. According to <strong>India</strong>n
<strong>of</strong>ficials, the reference prices are adjusted to align with international market prices, but
the edible oil reference prices remained unchanged from late 2006 to mid-2009. The
uncertainty about what price will be applied to the transaction adds to the risk <strong>and</strong> cost <strong>of</strong>
agricultural shipments to <strong>India</strong>. 64
Notice <strong>and</strong> Comment Procedures
A number <strong>of</strong> countries, including the United States, have persistent concerns about
<strong>India</strong>’s irregular <strong>and</strong> occasionally abbreviated process for notifying its trading partners <strong>of</strong>
59 <strong>India</strong> introduced electronic processing <strong>of</strong> import documents in 1995 <strong>and</strong> processes 85–90 percent <strong>of</strong>
total imports electronically, according to its most recent declaration <strong>and</strong> private sector sources. <strong>India</strong> also
implemented a risk management system in 2005 that has greatly reduced the need for inspections <strong>of</strong> most
import shipments. Together, these improvements reportedly have reduced the time for customs clearance to
eight hours. WTO, “Trade Policy Review: Report <strong>of</strong> the Secretariat: <strong>India</strong>,” July 24, 2007, 35; WTO Trade
Policy Review Body, “Trade Policy Review: Report by <strong>India</strong>,” April 18, 2007, 17–18.
60 WTO, “Trade Policy Review: Report <strong>of</strong> the Secretariat: <strong>India</strong>,” July 24, 2007, 34–35.
61 Industry representative, interview by Commission staff, Mumbai, <strong>India</strong>, May 29, 2009.
62 See Beghin, “<strong>Nontariff</strong> Barriers,” December 2006, 2.
63 The 1962 Customs Act authorizes the relevant <strong>India</strong>n government bodies to set the reference prices “if
satisfied that it is necessary or expedient to do so.” Customs Act, 1962, ch. 5, sec. 14.2 (“Levy <strong>of</strong>, <strong>and</strong>
Exemption From, Customs Duties: Valuation <strong>of</strong> Goods”).
64 WTO, “Trade Policy Review: Report <strong>of</strong> the Secretariat: <strong>India</strong>,” July 24, 2007, 103; USTR, 2009
National Trade Estimate Report on Foreign Trade Barriers, 2009, 238.
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