SubscriberWrites: MSMEs seek customs reforms to ease re-export hurdles and boost global trade

Indian exporters urge the government to relax re-export deadlines, clarify GST norms, and improve digital tracking as customs bottlenecks and valuation ambiguities hamper MSME competitiveness.

Representational Image | Seema Devi, 42, a member of Jeevika, travels daily for her day shift at RK Industries, which manufactures luxury garments for export to the US | Photo: Jyoti Yadav, ThePrint

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We, as a business entity actively engaged in international trade, wish to bring to your kind attention several operational and regulatory challenges persistently faced in the re-export of goods returned for faults or service requirements. We as a country scale to explore international business opportunities, these import – export hurdles will severely impact MSME’s like us to  create global opportunities.

Operational Challenges Faced by Our Company:

– Restrictive Customs Conditions and Time Limits: 

Under current customs regulations (Notification 158/95 and Section 26A of the Customs Act), organizations are subject to stringent deadlines—typically six months to one year—for re-exporting goods imported for repair or replacement. Oftentimes, unforeseen delays or logistical hurdles make it difficult to comply, which threatens our eligibility for duty exemptions and creates significant financial liabilities. Quite often product service and guarantee / warranty terms extend until 2 years. The timelines should factor in these considerations.

– Inadequate Monitoring Infrastructure: 

The absence of robust IT tracking modules for monitoring containers and goods returned for service restricts our ability to comply with re-export conditions reliably. Inaccuracies and gaps in the monitoring process routinely result in disputes and loss of duty exemptions.

– Short Shipments and Complex Re-Export Calculations: 

Partial returns of defective goods (“short re-export”) create complications in duty recovery and require elaborate paperwork, slowing down business operations and creating further compliance costs.

– Ambiguities in Service/Warranty Valuation: 

Our company faces frequent uncertainty regarding the correct customs and GST valuation for goods returned for service, especially when warranty repairs are bundled into initial sales. This lack of clarity exposes us to risk of misclassification and related tax disputes.

Recommendations for Regulatory Intervention:

To enable smoother compliance and strengthen India’s export competitiveness, we respectfully request the following reforms:

1. Extension and Flexibility of Customs Deadlines for re-export, allowing businesses additional time under genuine circumstances.
2. Expedited Implementation of Digital Tracking Solutions to streamline the monitoring and reporting process.
3. Clear, Consistent Guidelines on GST and Customs Valuation for service and warranty returns.
4. Simplification and Digitization of Refund Processes with longer claim windows and efficient grievance redressal.
5. Infrastructure Upgrades at Ports and Logistics Centers to reduce congestion and handling delays for goods requiring repair or replacement.

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