India explores deals for trusted traders

Entering into these so-called mutual recognition agreements (MRAs) on a key ‘ease of doing business’ measure called ‘authorized economic operators’ (AEO) programme has several benefits for India.

The privileges that accredited merchants and businesses get under India’s AEO scheme -- quicker clearance of shipments at ports, lower inspection rate, quicker tax refunds, facility for deferred duty payment and acceptance of self-declaration of origin of goods -- will be available to them in the country signing an MRA with India. Besides, AEO-accredited Indian exporters’ partners in other countries will also get these benefits.

Negotiations on MRAs are being pursued independently of trade talks which mostly focus on tariffs, said the person quoted above. Talks with the UAE and Australia are at an advanced stage, the person said. The East African Community comprises Burundi, DR Congo, Kenya, Rwanda, South Sudan, Tanzania and Uganda.The Central Board of Indirect Taxes and Customs (CBIC) now gives the status of AEO to close to 5,600 trade participants—importers, exporters, logistics providers, custom brokers and warehouse operators--as they are compliant with supply chain standards and security norms.MRAs allow partner countries to reciprocate the privileges the other country offers to businesses accredited by it. Signing MRAs is expected to give a big boost to cross-border trade for participating nations as trade is a key part of economic recovery.The AEO scheme is also at the heart of India’s efforts to improve ease of doing business in cross-border trade. AEO status is given to businesses based on fully online processing of documents and a physical verification of the premises.

Experts described the move to sign more MRAs as a huge trade facilitation measure which will give a competitive edge to Indian exporters in other markets by cutting short their time spent at ports. “The AEO scheme has significantly benefited India’s foreign trade and the extension of the MRA to cover many more countries would further enhance India’s trade competitiveness,“ said MS Mani, Partner, Deloitte India.“If an entity from another nation is covered by their AEO programme, its trade partner in India too will get the privileges because of the mutual recognition agreement even if the Indian entity is not covered under India’s AEO programme," the first person quoted above said on condition of anonymity.

The foundation of the AEO programme is trust, explained the person. An email sent to the spokesperson of the finance ministry on Tuesday seeking comments for the story remained unanswered at the time of publishing.