The customs department will soon start negotiations with Indias trade partners to enter into agreements that will reduce scrutiny and procedural requirements for local exporters and importers, facilitating faster movement of cargo.

Under the mutual recognition agreements (MRA), two countries agree to recognize each others compliance standards with regard to inspection, auditing and accreditation.

Exporters, importers and other logistic providers authorized by the customs department under the authorized economic operator (AEO) programme will benefit from these agreements.

Once the MRAs are signed with foreign countries, those countries will recognize our AEOs and it will make it easier for exporters and importers. Goods can move without hindrances from the factory gates to the destination between countries, said S.K. Goel, member, customs, Central Board of Excise and Customs. It will be time-saving and reduce costs as well.

Indias customs department had notified the AEO programme in August as part of the Safe Framework of Standards (SAFE) adopted by the World Customs Organization. SAFE aims to support secure movement of goods by setting a range of standards for customs administrations and entities to follow. AEOs will get preferential treatment over non-AEOs and their consignments fast-tracked through customs controls.

Various countries have different security concerns. It is difficult for the customs authorities to examine cargo and address the security concerns, said T.N.C. Rajagopalan, an independent trade analyst. But if the exporter or importer has AEO status, his declaration will be accepted both by domestic and foreign countries custom authorities leading to faster movement of cargo.

India plans to sign accords with trading partners that have implemented AEO programme. The US, Japan and the European Union have some kind of AEO scheme, Goel said. We will enter into talks with them and look to sign these MRAs.

Entities will be notified as AEOs by the Central Board of Excise and Customs if they have a good track record of compliance of customs rules and other provisions, are financially solvent, have satisfactory systems of managing commercial and transport records, and have good security and safety standards.

We will start granting AEO status to the parties, and have invited applications for a pilot project. A few applicants will be selected for the pilot, Goel said. Depending on the results of the pilot, we should start granting AEO status to entities from next year, Goel said. The government will then start negotiating MRAs with foreign countries.

The grant of AEO status will also reduce the burden on the customs department. Customs primary responsibility is revenue generation. They have to perform assessment, valuation and examination of goods. Grant of AEOs will take care of security concerns, Rajagopalan said.

The scheme will benefit importers as they have to get more clearances, said A. Sakthivel, former president of Federation of India Export Organisations. Security concerns are greater when goods are imported.