Blame it on Ficci

Years ago, when I was a lot more innocent, I asked my boss at Ficci, D H Pai Panandiker, why the government couldn’t just have a one-page form for clearing exports and imports the way they had in countries like the US.

Since we at Ficci, as in all other chambers of commerce, were paid to tout the arguments made for us by the industrialists who paid out good money to keep the organisation running, I expected Panandiker to launch into a diatribe against sundry bureaucrats.

Instead, in his usual soft tone, he said, “Well if you want a new concession for everything, then you have to live with the formalities I guess—say you don’t want a concession, and you don’t even need to fill up a form.”

More than 15 years later, the story’s much the same—customs procedures remain as complicated, but this time around I realise the role that industrialists such as those in Ficci-CII have to play in this sorry state of affairs.

Today, to quote some numbers from the Kelkar report on meeting the FRBM targets, in any standard publication on the customs tariff structure of around a thousand pages, there are around 400 pages that describe about 110 general exemptions, each of which is then further sub-divided into various letter combinations and roman numerals (general exemption number 107, which I have in front of me right now, runs into 92 pages, has 441 exemptions, and has an additional 47 lists which specify products for which certain exemptions may be given).

While it is true that Indian manufacturers and exporters have an unlevel playing field vis-à-vis their global counterparts on account of higher energy charges and so on, for which they have to be compensated, the compensations being asked for go way beyond what is required—so what you have is such a complicated system for getting compensation that it defeats the very purpose it was given for, considering that large parts of the compensation have to be paid out in order to get what is yours by right.

Yet, there’s hardly any budget, and the day after will be no exception, where a Ficci-CII doesn’t want some exemption or the other to be added to the list.

While exemptions were sought for “heavy industry” projects in the past, today’s exemptions are sought in the name of IT, e-governance, telecom, and so on.

Every exemption, you see, has “conditions” that need to be fulfilled before they can be availed.

So, while most edible oils had an import duty of around 100 per cent last year, certain categories of users were allowed to import it at 75-85 per cent, but for this they had to be registered with the Directorate of Vanaspati and “follow the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996.”

Similarly, while organic chemicals can be imported at a 20 per cent duty, they can be imported at a zero rate of duty by manufacturers of laser equipment, provided the importer “furnishes a certificate from an officer not below the rank of a Deputy Secretary ... in the Department of Atomic Energy” with all physical and technical specifications and then “furnishes an undertaking ... to the effect that the imported goods shall be used for the above purpose ...”

Electric parts for fitting on electric/table/wall/ceiling/garden lamps can, it appears, also be imported duty-free, as can hinges, metal locks, and the back of photo frames/box provided “the goods are imported by a manufacturer of handicrafts for use in the manufacture of handicrafts for export”, that the value of the goods imported doesn’t exceed “3% of the FOB value of handicrafts exported during the preceding financial year”, and the exporter “produces a certificate from the Export Promotion Council for Handicrafts certifying the value of exports ... and also the description, value and quantity of the item(s)”.

Now just imagine what you need to do. The export council needs to specify that you exported a certain value, someone else certifies that you have a certain level of production, that you actually used the import for what you said you would, the list goes on, probably requiring signatures of 20-30 officials to avail of the smallest of exemptions.

Is it any wonder that bureaucrats are as corrupt as they are? But if this year’s budget doesn’t see these exemptions going, put the blame on Ficci-CII, for they’ve never stepped out aggressively asking for a complete cleaning up of the system.