Introduction to EU’s New Customs Norms
The European Union (EU) is set to implement a new paperless customs system, starting June 3, 2024, significantly impacting Indian exporters. This change is crucial as the EU is a major trade partner, accounting for 17% of India’s merchandise exports. In 2022-23, India exported goods worth USD 75 billion to the EU. The new system involves a complete Entry Summary Declaration (ENS) dataset submission to the Import Control System 2 (ICS2), covering all import methods including sea, inland waterways, road, and rail.
ICS2 Implementation and Its Impact
The EU’s move to ICS2 is an extension of the existing Import Control System. The first two phases, covering 15% of imports, were already implemented for air mail, express deliveries, and air cargo. The upcoming third phase will cover the remaining 85% of imports by value. ICS2 will encompass all goods, from raw materials to live animals, and aims for a paperless and risk-based import compliance process, reducing the need for paper declarations and simplifying customs clearance.
Indian Exporters’ Readiness and Compliance
Indian exporters must prepare for this new EU system, requiring accurate and complete product information, including Harmonized System (HS) codes and detailed descriptions. The data upload to ICS2 must occur before goods arrive in the EU, typically through the carrier’s system. Late submissions can lead to delays and penalties. Exporters are advised to keep copies of all submitted data for potential inspections or audits.
Responsibilities and Penalties
Carriers bear the primary responsibility for filing the ENS with ICS2, ensuring data accuracy and timeliness. However, exporters also play a crucial role in providing correct information. Non-compliance or errors can lead to delays, financial penalties, and operational disruptions. To avoid these, Indian exporters need to register in the ICS2 system, train personnel, and upgrade their software and IT infrastructure.
Opportunities and Future Trade Relations
Adapting to ICS2 offers an opportunity for Indian exporters to streamline export processes and strengthen their position in the EU market. The EU frequently intercepts Indian exports like chilies and drugs for various reasons, so close monitoring of the new system’s treatment of such products is essential. The two-way trade between India and the EU amounted to USD 136 billion in 2022-23, highlighting the significance of this relationship. With ongoing negotiations for a free trade agreement, compliance with ICS2 could further boost trade ties.