The recent instance of double counting and subsequent downward revision of India’s trade data on imports has brought into focus the methodology deployed by the country in computing its monthly data on imports and exports. Most imports and exports from India take place either via the sea or the air route, where the entry and exit points are manned by the Customs Department for purposes of levying the prevailing import and export duties as well as checking the movement of commodities that can’t be traded.
All exporters are required to file shipping bills, and all importers are mandated to file bills of entry through the Electronic Data Interchange (EDI) system of the Customs Department. The data used to be filed using the SEZ Online System, from where the trade data started to get compiled. While the SEZ Online System used to account for imports in over 100 SEZs, ICEGATE (Indian Customs Electronic Gateway) used to record imports at all other ports (non-SEZs) prior to May 2024. Both systems (i.e. ICEGATE and SEZ Online) were transmitting the EXIM data separately to DGCIS for publishing foreign trade statistics.
From May 2024, India started migrating its data on exports and imports from the SEZ Online System to ICEGATE, which is the national portal of the Central Board of Indirect Taxes and Customs (CBIC).
SEZs used to be counted separately on the SEZ Online System as they’re treated as foreign entities for purposes of the levy of customs duty. Government sources explained that migration to the new system meant ICEGATE started getting used to account for imports even in SEZs. All importers are mandated to file Bills of Entry via the Customs Department’s Electronic Data Interchange (EDI) system. But the old system didn’t automatically shift the bill of entry to ICEGATE for imports to the DTA (Domestic Tariff Area).
This implied that ICEGATE’s records didn’t distinguish between the import of goods into SEZs and from SEZs into DTAs. Part of the goods imported into SEZs for value addition or use are also imported into DTAs. But the 2nd leg of DTA clearances wasn’t transmitted and started getting recorded as an independent transaction under ICEGATE. As ICEGATE had never handled SEZs, it kept on counting the movement of goods from abroad to SEZs and SEZs to DTAs as discrete. Sources explained that the movement of goods from DTAs to SEZs is technically an export for purposes of customs duty. Goods manufactured in SEZs often go for value addition/job work to DTAs and come back, which needs to be accounted for separately in ICEGATE.
For instance, 100 units of an item are imported into an SEZ, and 10 units are used or deployed there itself. Subsequently, 90 out of the 100 units are imported into the DTA, in different denominations. In such a case, only 10 units used in the SEZ will be exempted from purposes of counting for imports.
Owing to the persistence of certain technical glitches, the migration is still not complete. Both SEZ Online and ICEGATE are still capturing and transmitting mutually exclusive EXIM data to DGCIS. The government is in process of upgrading ICEGATE’s digital infrastructure to make counting of imports faster and more efficient.
