• Customs and International Trade

Customs and International Trade

Businesses invariably are required to transport goods, materials and merchandise across borders which forms the basic foundation of international trade. In India, cross-border trade involves dealing with Customs, the Border Control Authority and understanding the trade policy measures adopted by the Government for export and import of goods. For traders seeking entry into the Indian market, a good understanding of the Trade Policy and Customs environment is extremely essential. This helps in making an informed decision as well as in managing risks related to cross-border trade regulations.

At BDO, we not only assist businesses reduce international trade costs but also help them in efficient management of import/export risks and establish transparency in their cross-border transactions. Our services on Customs & International trade help Companies strengthen their global supply chain and unleash the potential of your business.

Key Customs challenges for cross border trade in India

Traditionally, Customs challenges have been Valuation and Classification of goods. Over the past 2 decades, determination of origin for seeking preferential tariff rates has emerged as new challenge. However, the management and mitigation of overall Customs risk for business is the largest of all customs related challenges for any enterprise with a cross border supply chain.

Customs impacts all 3 dimensions of Corporate functioning –

  • Financial Reporting
  • Operations
  • Compliance

Customs risks include

Compliance Risks

Business Risks

  • Valuation
  • Classification
  • Exemption Claims
  • Estimation of duty
  • Failure to adopt duty mitigation options
  • Failure to source from preferential areas
  • Taking positions contrary to Transfer Pricing
  • Disruption to supply chain
  • Adverse impact on Corporate reputation






Customs Valuation

BDO India has both, a broad and deep understanding of the national customs valuation provisions as well as how the national customs administration views these provisions. A few of our senior team members are ex-Customs & Excise officials who are in a position to provide additional insights into the authorities’ point of views and concerns relating to customs valuation.

Customs Classification

Wrong classification of goods has serious ramifications for importers and exporters under Indian Customs laws.  BDO India services on Customs classification not only deal with the study of the HSN and product categorisation from a Customs Tariff standpoint but these also include assistance in applying for an advance ruling as well as meeting customs authorities to clarify any aspects specific to the product category and HSN.

Determination of Origin

Given the very objective of importing under FTA being entitlement to a lower customs duty rate, the process of claiming and substantiating preferential origin is subject to much and increasing scrutiny from Customs Authorities.

At BDO, we assist in one or more of the following ways:

  • Advising on the coverage of the Preferential Trade Agreement;
  • Evaluating the product manufacturing process to advise on its origin as prescribed by the relevant Origin Rules
  • Comparative analysis of duty savings under the FTA to estimate the exact quantum available to a product category

Key challenges under India’s Foreign Trade Policy

Identification & Quantification of Export oriented benefits/incentives

Even under the current Foreign Trade Policy (April 2015 – March 2020), the Government has incentivised goods exports under –

  • Merchandise Export from India Scheme (MEIS) & Export Promotion Capital Goods (EPCG) Scheme
  • Services exports has been incentivized under the Service Exports from India Scheme (SEIS)
  • MEIS & SEIS offer duty credit entitlement to exporters, in the form of Scrips, that can be used to debit import duties or can even be traded (duty credit scrips are freely transferable)

BDO India has professionals with core knowledge of the Policy and Procedures that will help clients achieve the desired objectives.

Designing the template for procedure to obtain the policy benefits

Right from applying for the Import – Export Code (IEC) to suggesting the procedure to be adopted for applying for the identified scheme/benefit available under the Policy, we assist businesses to get complete clarity on how benefits will eventually materialise in a time bound manner.

Actual assistance in obtaining the policy benefits

BDO India offers handholding assistance on securing the incentives under the Foreign Trade Policy in all the major port cities in India. This assistance could be by way of preparing the application forms, collating the supporting documents and making the application under the client’s express authorisation. It also involves rigorous follow ups with the Regional Foreign Trade Authority (Additional Director General of Foreign Trade or Zonal DGFT)

Duty free enclaves

Special Economic Zones (SEZs): Clearance of goods from SEZ zones is closely monitored to prevent accidental or deliberate diversion to the domestic market. SEZs also come in two variants – the one where manufacturing is undertaken under Customs bond and the other, also known as Free Trading & Warehousing Zones (FTWZs), where goods are procured purely for storage and selling overseas (export trading). The requirements and restrictions prescribed for FTWZs are similar to those for bonded manufacturing in SEZs but no processing other than minor jobs, to keep products in good condition, is allowed. Registration under SEZs and periodic compliances is a rigorous obligation in terms of the application process, obtaining the approvals, filing periodic performance reports, etc. If any compliance lapse is identified by the SEZ Authority (Development Commissioner), a company may lose its authorisation to use the facility and be subject to penalties for the breach of regulations.

BDO is able to provide solutions to help companies achieve optimal benefits from such facilities, through:

  • Qualification Assessment
  • Application Support
  • Compliance Reviews