Trade across the world is crippled and stranded – hit severely due to coronavirus outbreak becoming a pandemic – global supply is nearly collapsed – cargo movements are erratic. The international shipping lines are affected. Entire Trade Transactions are almost Paralysed. Even though major countries have not put trade restrictions for Cargo movement, operational slowdown is witnessed at land borders, seaports and airports for entry of non-essential items. However, in some cases shipments are stuck in high sea because of lockdown in the destination port. In this precarious situation exporters are mostly distressed, as their orders are either cancelled or cargos are stuck midway or even shipments getting returned or payments are delayed or even become doubtful. This is unprecedented.
Government and Concerned Departments are trying to address some of the issues. The government, Customs, DGFT, RBI and other departments have taken a series of measures to provide relief to the Exporters. Let’s briefly discuss various measures taken in this regard:
Facing Delay in Securing Necessary Export Inspection Certificates, Certificate of Origin and other Documents
Most of the authorities for issuing certificate of origin and Inspection Certificates are operating with minimal staff, therefore and also because of Lockdown conditions exporters are finding difficult to reach out to them. Some of the Chambers are issuing scanned copies through mail. For negotiating documents through bank, however original documents are essential for banks to honour letters of credit. This is a real hurdle for exports.
Online filing and Issuance of Preferential Certificate of Origin through the Common Digital Platform is available through DGFT portal http://coo.dgft.gov.in. Exporters may avail this facility for export to Countries with whom FTA / PTA treaties are signed by India.
Acceptance of scanned copies of pre-registration application and other documents by Local Users for REG under the European Union’s Generalised System of Preferences (EUGSP) – DGFT TRADE NOTICE NO. 61/2019-20; 2nd April, 2020
under the EU GSP Self-Certification system, applicant exporters need to fill a Pre-Application form with requisite details to pre-register themselves with the relevant Local Users for REG under the EU GSP REX system. Subsequently, they take a printout and submit the physical copy with relevant documents to the Local Users for REG for obtaining their REX number. In view of the closure of establishments / restrictions on moving out of residences imposed in India due the COVID-19 pandemic, the offices of the Local Users for REG are either closed or working with skeletal staff and hence the applicants are unable to visit to the offices of Local Users to physically submit the Pre-Application Form.
It is therefore instructed that until the offices of the Local Users for REG open after normalcy returns, they would accept scanned copies of the Pre-registration application and other relevant documents submitting by the applicant exporters for processing their applications. The REX numbers would also be issued and the scanned copy sent by email to the exporters. Moreover, in case of any deficiency, this would be electronically communicated to the exporter and all additional documents would be accepted on email for correcting this deficiency and issuing the REX number.
Indian Government also has urged the countries, with which it has free trade agreements (FTAs), to allow imports of goods without certificate of origin for the time being as the domestic authorities are currently not issuing the document on account of lockdown due to COVID-19 pandemic.
Waiver of Late Fee for Filling of Bills of Entry
Late filing of bills of entry attracts late fee in terms of ‘Bill of Entry (Forms) Amendment Regulations, 2017’ vide Notification No. 27/2017- Cus.(N.T.) dated 31.03.2017 read with second proviso to Section 46(3) of the Customs Act, 1962. Therefore, keeping in view the exigency due to outbreak of Corona Virus and, in order to facilitate the trade for clearance of the import consignments, it is decided in the public interest to Waive late fee for Bill of Entry in respect of IGM filed between 21st March-14th April, if BOE filed by 17th April,2020.
Waiver of Detention / Demurrage Charge by the Shipping Lines
DG Shipping instructed waive off such charges for the period from 22nd March-14th April , 2020.
Importers not clearing containers – Congestions at Ports, CFS, ICDs
Importsare not being cleared by the importers and custom house agents amidst a 21-day lockdown to combat the spread of coronavirus – there are several constraints and shortage of tractor-trailer drivers. This is resulting in a pile-up of large number of import laden inventory in all the CFS’s/ICD’s, resulting in a cascading effect on port inventory and lead to congestion in ports.
To facilitate faster clearance of consignments to and from China once coronavirus subsides, a 24×7 customs clearance facility will be available at all sea ports and airports till May 2020.
24×7 clearance : CBIC Instruction 02/2020-Customs; 20th February, 2020
Nodal Officers from the CBIC Customs Zones/Formations for facilitating Customs clearances amidst the Covid-19 crisis
OFFICE MEMORANDUM; F. No. CH(IC)/RR/2020/OM-01; 1st April 2020
Customs Houses Duty Roster to all Officers to Handle Export – Import Consignments and also Circulated Contact Details of Officers to attend Urgent Consignments of Life Saving Equipment’s and other Essentials.
Ministry of Home declared “transportation” as Essential Services
Transportation of exports and imports goods are covered under “Essential Service”
Container Freight Stations Association of India (CFSAI), has issued Trade Advisory and highlighted that most of the states have categorically declared “CFS’s, Warehouses and offices CHS’s being essential services shall be excluded from the restrictions”. The Association also assured complete support to the trade in this difficult situation.
Running of Parcel Special trains to ensure supply of essential commodities
In view of the COVID-19 pandemic engulfing the country at present, Indian Railways is making all efforts to ensure that the supply of essential commodities remain uninterrupted. As a means to ensure this uninterrupted supply, Indian Railways has started 22 Parcel Special trains between different origin & destination pairs. These trains are planned to run on fixed timings on nominated days, with commercial (loading/ unloading) halts at important intermediate stations.
Cancellation of Orders or their Shipment is Stuck in High Sea because of Lockdown in the Destination Port
Considering the supply chain disruption caused by the COVID-19 outbreak, it is likely that performances under many contracts will be delayed, interrupted, or even cancelled.
Exporters, may seek to delay and/or avoid performance (or liability for non-performance) of their contractual obligations and/or terminate contracts, either because COVID-19 has legitimately prevented them from performing their contractual obligations. However all these comes with some short of business litigation and risk, but no other choice.
RBI extended the time for realisation and repatriation of proceeds for exports made up to or on July 31, 2020 to 15 months from the date of export against nine months earlier.
Realisation and Repatriation of Export Proceeds-Relaxation
The Government of India as well as the Reserve Bank has been receiving representations from Exporters Trade bodies to extend the period of realisation of export proceeds in view of the outbreak of pandemic COVID- 19. It has, therefore, been decided, in consultation with Government of India, to increase the present period of realization and repatriation to India of the amount representing the full export value of goods or software or services exported, from nine months to fifteen months from the date of export, for the exports made up to or on July 31, 2020.
RBI issued guidelines to Banks to permit the corporates to take delivery of the overdue contract or cancel the contract and pass the gains if any, during the period (upto3 days post maturity). This relaxation would be applicable to all the live contracts (as on date) and the prospective contracts maturing till April 15,2020
Hedging & Forward Contracts – Risk of Exposure
Exporters who booked forward contract in advance to hedge their future forex exposures are worried because of cancellation of orders or delay in delivery of shipments.
Demands and suggestions for Converting Loss in forward cover to an interest free loan to be paid after 90-180 days and auto enhancement of credit limit by 10%, are already forwarded by FIEO and various federations to the Government and RBI. We may expect some sort of relief.
Demands from Exporters to RBI and Government:
a) The packing credit availed (both INR & Foreign Currency), for manufacturing or procurement of goods meant for export should be extended by 180-270 days ((Normal period assessed for the firm + 180-270 days)
b) The unrealized export bills discounted/under collection and wherever payments are getting elongated should be extended commensurately by 180-270 days (Normal NTP or Usance period + 180-270 days). Accordingly, Crystallization of documents due to delayed payment can be done away with, and overdue interest in respect of Pre shipment and post shipment advance should not be levied.
ECGC taken the following measures to support our policyholders
1. Time limit is extended up to 31.5.2020 for all returns, extension requests, defaultnotification, etc.
2. Time for filing claim, reply to claim queries, representations is extended up to June2020.
3. Specific Shipment Policy expiring in March 2020 is extended automatically up to June2020.
4. Waiver of Credit Limit Application fee till 30th June’ 2020.
5. 50% reduction in policy proposal fee for policies due to renewal/issue from 1st March’2020 to till 30th June’ 2020.
6. Discretion to exporters (within RBI guidelines):
(a) to extend due date for payment by buyers for shipments accepted earlier.
(b) to decide about resale / reimport / or abandonment for the shipments that reacheddestination but not cleared by overseas buyers due to lockdown in the destinationcountries.
7. Reduced Claim eligibility period (waiting period) from the present 4 months to 1 month.
ECGC cover may protect Export Receivables to some extent, but at cost.
Coronavirus outbreak: Commerce ministry sets up help desk to resolve Import, export issues
The government has setup a helpdesk for Covid-19 related export and import related issues being faced in the current situation.The helpdesk was operationalised by the Directorate General of Foreign Trade (DGFT).The directorate on Thursday said that exporters and importers can directly flag their issues through the DGFT website, email or telephone call on a toll-free number. All issues related to the Department of Commerce or DGFT can be forwarded at this help desk. A proforma spreadsheet listing coronavirus-related import and export issues can be sent to ”[email protected]”.
The proforma seeks details such as data, IEC number and details of the issue that the traders want to flag.
Concerns over the uncertainty in global market due to coronavirus outbreak and the nature of impact that it could have on our exports & imports may linger, beyond anyone’s estimate, it is appreciable the response of Indian government and associated departs in timely actions, and request the trade which is bleeding now to come up with their solutions or suggestions at this difficult times.
Jointly Let’s Fight COVID-19
Disclaimer : The views and opinions; thoughts and assumptions; analysis and conclusions expressed in this article are those of the authors and do not necessarily reflect any legal standing.
(Author Can be reached at [email protected])