Background
The government has implemented various measures to promote the growth of India’s manufacturing sector, such as the Production Linked Incentive schemes that were announced for the electronic industry under the Make in India initiative. It has also taken several steps to smoothen and fast track the import process, through digitalisation and faceless assessments. However, some issues remain.
The industry has been facing significant challenges with the handling and storage of raw materials due to inadequate facilities at some of the ports and customs warehouses. For instance, not all ports have climate-controlled storage facilities, posing a risk for sensitive components like semiconductors, circuit boards, lithium-ion batteries, etc., which require specific temperatures and humidity conditions. Further, lack of technically trained personnel to handle the goods is an added disadvantage. These issues often result in moisture damage, oxidation, or static electricity issues, ultimately affecting the quality of the materials, thus putting a strain on importers. Such concerns prompted importers to make several representations to the Central Board of Indirect Taxes and the Ministry of Finance to allow inspection of these imported goods at their premises. We also assisted a few of our clients in making such representations.
In light of the same, the government implemented the Customs (On-Arrival Movement for Storage and Clearance at Authorised Importer Premises) Regulations, 2025 (“Regulations”), on February 17, 2025, which are aimed at streamlining the process of moving, storing, and clearing imported goods at the importer’s premises (“Authorised Importer Premises”), rather than at the congested and lesser-equipped ports before their clearance.
Conditions for availing the benefits of the Regulation
The benefits of this streamlined process will only be available to importers holding the Authorised Economic Operator (“AEO”) status (Tier II or Tier III). Such importers are recognised for their compliant and secure supply chain practices. Further, the goods must be stored in either (i) a licenced private warehouse or a special warehouse under Section 58 or Section 58A of the Customs Act, 1962 (“Customs Act”), or (ii) a licenced bonded warehouse, wherein manufacturing and other operations are permitted under Section 65 of the Customs Act. Finally, the last condition for availing this facility is that the goods must be classifiable under Customs Tariff Headings 8517-8548.
It must be noted that Customs Tariff Headings 8517-8548 include a diverse range of equipment and components essential for telecommunications, audio and video recording and reproduction, broadcasting, electrical circuit management, and specialised electrical functions. These items cover telephone sets, smartphones, sound and video recording devices, semiconductors, transmission and reception apparatus for broadcasting, electrical components such as capacitors and resistors, and various electrical machines. These components, within this category, are crucial for the functioning and advancement of telecommunications, broadcasting, and electrical engineering industries.
The Saga of CTH 8517 to 8548
A glance at the list of items included under CTH 8517 to 8548 makes it evident that these are high-value and sensitive electrical products and raw materials. Many of these items may require specific storage conditions and careful handling. Importers are better equipped to manage these requirements at their own premises. For instance, video recording equipment and semiconductors cannot be exposed to open environments, as it risks introducing impurities and contaminants like dust, particles, or gases, jeopardising the quality and functionality of the goods. Moreover, many processes in these industries occur in vacuum conditions, and opening equipment in non-controlled settings would break this vacuum seal, disrupting the manufacturing process and potentially damaging the delicate materials involved. Strict adherence to controlled environments is essential to ensure the integrity and reliability of production processes.
Importers with AEO status are already compliant with stringent customs and security measures. Allowing them to handle clearance at their premises ensures that these standards are maintained, reducing the risk of non-compliance and enhancing overall control over the import process. However, there are certain situations when this permission may not be granted — if the goods are found suspicious after scanning, no-objection is pending from any Government agency, or that the release of the goods is kept on hold basis specific intelligence.
Remarkably, all applications submitted by AEOs requesting clearance at Authorised Importer Premises must be reviewed and communicated to the applicant within seven days. This period may be extended by an additional fifteen days if the information provided by the importer is insufficient to decide on the application. These timelines indicate that the Regulations are intended to not only simplify the import procedure, but also fast track it.
Obligations on the AEO
While the Regulations represent a forward-thinking approach and are a significant step towards revolutionising the customs clearance process, they place some obligations on the AEO as well. These include executing a continuity bond for custody of the goods during movement, ensuring that the goods are cleared or removed within fifteen days of permission being granted, and maintaining records of receipt, handling, storing and removal of goods into or from Authorised Importer Premises. If these obligations are not fulfilled, the authorisation may be revoked.
Final thoughts
While the Regulations impose considerable responsibilities on the AEOs, the cost and time saved by availing the streamlined process under these Regulations, far outweigh those required for undertaking the obligations. Companies wanting to benefit from these Regulations must rethink their logistics — maintain secure storage facilities at their premises to handle the imported goods. Further, they must maintain detailed and accurate records of all imported goods, including their movement, storage and clearance; and implement efficient inventory management practices to ensure timely access to imported goods.
Overall, these Regulations will expedite the import process, foster trade efficiency, and enhance the overall logistics framework. By empowering authorised importers to handle the clearance process at their own premises, these regulations have paved the way for a more streamlined and cost-effective import process. As global trade continues to evolve, such innovative measures are essential for fostering a competitive and resilient logistics framework and making India a manufacturing hub.
For further information, please contact:
Kunal Savani, Partner, Cyril Amarchand Mangaldas
kunal.savani@cyrilshroff.com
