Mint Quick Edit | Trade relief: The budget signals the end of an inspector raj at Indian ports

3 hours ago 3

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The budget’s broad-sweep liberalization focuses on easing customs processes. (Bloomberg)

Summary

Amid trade turbulence, the budget promises relief from an old bugbear at Indian ports. With tech tools set to ease the grip of a legacy inspector raj, smoother customs passage may help manufacturers join global value chains. These reforms are welcome but don’t go far enough.

Amid an unravelling of global trade, the Union budget has proposed some welcome steps to ease the pain. As one-off relief for eligible export-oriented manufacturers in special economic zones, for example, it proposes a pathway to let them sell some of their output within India at a concessional duty rate.

The budget also enlarges duty-free import quotas for inputs used by some sectors with high export potential (seafood and leatherwear, notably). Tariff barriers are to be eliminated for cost-control in key sectors. Components for manufacturing aircraft, for instance, will enjoy customs duty exemption, as also equipment for nuclear power projects and capital goods needed to process critical minerals.

The budget’s broad-sweep liberalization focuses on easing customs processes. Technology will be deployed to allow automatic goods registration and smooth clearances, with scanners replacing intrusive peeks into containers.

All this should keep today’s port-level ‘inspector raj’ in check and help Indian exporters and importers snap into global value chains that tolerate no delays. What’s missing, however, are across-the-board tariff reductions that some trade economists had hoped for. Studies have long shown that low import tariffs on the whole are closely correlated with export success.

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