India Accelerates Customs Agreements to Enhance Global Trade Efficiency

Global Trade

India is taking significant steps to streamline international trade by fast-tracking customs agreements with key global partners. By the end of the June quarter, India is expected to sign mutual recognition agreements (MRAs) with the customs authorities of Singapore, South Africa, and potentially the United Kingdom. These deals are aimed at simplifying customs procedures, boosting bilateral trade, and enhancing trade facilitation for accredited exporters and importers.

According to senior officials at the Central Board of Indirect Taxes and Customs (CBIC), these MRAs will lead to mutual recognition of country-specific accreditation programmes under India’s Authorized Economic Operator (AEO) scheme. The AEO programme is a globally recognized trade facilitation initiative designed to provide benefits such as quicker clearance of shipments, reduced inspection rates, expedited tax refunds, deferred duty payments, and acceptance of self-declaration for the origin of goods.

Once an MRA is operational, Indian accredited exporters and logistics operators will receive equivalent treatment in partner countries, even if their trading counterparts in those countries are not accredited under the local scheme. These measures are expected to significantly enhance the ease of doing business, while also encouraging smoother and faster cross-border trade.

India is currently working to operationalize an MRA with the United States. Discussions are ongoing to address technical requirements, including compliance with the IT security standards of the US systems. Further negotiations with the European Union (EU) are expected after the proposed bilateral Free Trade Agreement (FTA) is finalized.

To increase awareness and participation in the AEO programme, CBIC recently held an outreach event in collaboration with the Confederation of Indian Industry (CII). The event focused on expanding the scope of the accreditation scheme and enhancing trade efficiency.

India’s exports to Singapore reached $14.4 billion in 2023–24, making it the country’s fifth-largest export destination. The UK ranked sixth with nearly $13 billion in exports during the same period. Meanwhile, the US and the UAE remained the top two export markets, with India exporting $77.5 billion to the US and $35.6 billion to the UAE.

India has already signed MRAs with several economies, including Russia, Hong Kong, Japan, Taiwan, Australia, New Zealand, and South Korea. These agreements aim to create a more predictable and efficient trading environment, especially amidst ongoing global trade uncertainties.

In a related development, the US administration recently announced a 90-day suspension on additional reciprocal tariffs affecting non-retaliating trade partners, including India. A revised tariff rate of 10% is now effective, replacing a proposed 27% rate. In contrast, countries like China that retaliated face additional tariffs of up to 125%.

As India continues to pursue mutual recognition agreements and trade facilitation reforms, these developments signal the country’s commitment to enhancing global trade connectivity and supporting its growing exporter base through simplified customs processes and broader AEO programme benefits.

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Mahendra Bhavsar & Co.