Exporters have urged the Commerce Ministry to develop an end-to-end digital system for processing exports under free trade agreements (FTAs), citing delays caused by fragmented systems and repeated verification. They have called for better coordination between the Directorate General of Foreign Trade (DGFT), customs and banks, saying the existing processes delay shipments and lock up working capital, according to sources aware of the matter.
During a workshop on Ease of Doing Business (EoDB) initiatives and FTA opportunities on Tuesday, Commerce and Industry Minister Piyush Goyal and ministry officials interacted with industry stakeholders. Exporters flagged challenges in shipments to FTA partner countries and called for customs, DGFT and banking processes to be integrated into a single digital platform to reduce manual intervention and improve ease of doing business.
“Currently, there are a lot of manual interfaces with Customs, DGFT and banks. It can be brought on to one single platform,” a source said. Such integration could also improve exporters' working capital cycles by reducing delays in processing and verification, exporters said.
Another key concern raised by exporters was the verification of certificates of origin (CoOs) issued under FTAs. Under these agreements, goods meeting prescribed rules of origin can qualify for zero or significantly lower customs duties in the partner country.
When customs authorities seek to establish the origin of goods, the CoO may be sent back to the issuing authority for verification. Exporters said such verification is required in a majority of FTA cases and can result in bank guarantees being furnished until the process is completed.
“For majority of FTAs, we have to send it back for verification... and it is passed through a bank guarantee,” an exporter said, adding that some guarantees had remained uncleared for as long as 10 years.
Under the current system, a bank guarantee provides financial security to customs when goods are released before completion of the verification process. The guarantee can cover the customs duty that would otherwise have been payable without the FTA concession, along with potential liabilities.
Exporters argued that linking India's systems with those of FTA partner countries could enable digital authentication of certificates and speed up verification, reducing the need for such guarantees.
