Date:07/04/2006 URL: http://www.thehindu.com/2006/04/07/stories/2006040705731700.htm

Business

Share of customs in government revenue will decline: FM

Special Correspondent

Role of customs in future will be enforcement, trade facilitation

— Photo: AP

`RE-ENGINEERING WORKING CULTURE': Union Finance Minister, P. Chidambaram, at the World Customs Organization Information and Communication Technology conference in Bangalore on Thursday.

BANGALORE: Customs will not be a principal source of revenue for the Government in the long-run, the Union Finance Minister, P. Chidambaram, stated here on Thursday.

Addressing the International Information Technology Conference organised by the World Customs Organisation here, the Finance Minister said customs accounted for a large proportion of the total revenues. "In India, it is close to 20 per cent. But, with customs tariffs coming down from as high as 100 per cent to a peak rate of 12.5 per cent now, customs will not be a principal source of revenue in the long-run. The principal role of customs in future would be enforcement and trade facilitation," he said.

The challenges arising from a constantly and rapidly changing world requires customs to respond in a fashion that combines two seemingly contradictory nature of their roles of enforcement and trade facilitation without falling to the temptation of maximising revenues.

If information and communication technology (ICT) is the growth engine of the 21st century, it was even more so for customs, which is an essential instrument for the effective management of an economy by performing vital roles of ensuring security within the country's borders, its economy and public health while simultaneously removing obstacles and facilitating the flow of legitimate trade.

Mr. Chidambaram said the role of customs was interventionist in global trade transactions. "But, what is interventionist cannot be interruptionist," he emphasised. Any organisation that had the power to apply controls and intervene in social, economic or trade process had the added responsibility to establish processes and procedures that would contribute to a positive climate and culture where international trade is not hampered by concerns of time or transaction costs and where customs can deliver services with minimal adverse impact on trade activities.

To make full use of the opportunities provided by information technology, customs control mechanisms needed to shift from the traditional method of physical inspection towards greater use of selective audit.

Referring to the fundamental changes made by Indian Customs in its working environment and the way it undertook its activities, Mr. Chidambaram said it had implemented an extensive automation programme that enabled trade to conduct a major part of its business with customs from their homes or offices.

With increased use of risk management techniques and selective scrutiny of cargo, soon customs clearance would be done in a matter of hours rather than days and it would be necessary for trade to interact with port/customs only for the purpose of taking delivery of cargo.

He said the process of "re-engineering" the working culture of the Customs Department was under way and it was expected to be completed this financial year.