New Delhi: India will not allow imports without HSN codes, Commerce Minister Piyush Goyal said on Wednesday.
In trade parlance, the Harmonized System of Nomenclature (HSN) of codes is an international system for the systematic classification of goods.
At present, traders need to mention HS Codes in the Bill of Entry (BoE) while importing goods into the country.
India, currently, maintains eight-digit HSN Codes for goods.
The development assumes significance as imports had surge in the category of "Others", and goods falling under this category do not have an HSN code.
Speaking at the 6th National Standards Conclave on the subject of Standards for Trade Facilitation, Goyal stressed that the government is committed to establishing standards of Indian products and services to world class levels.
This, he said, will enable India's exports to be accepted globally due to the quality of goods and services.
Besides, the minister stated that the time has come to get out of the mind set of subsiding exports and adopt the mantra of 'zero defect, zero effect' in order to ensure that emerging India will be the destination for quality products and services.
He said that the new Bureau of Indian Standards (BIS) Act is relooking at all standards for goods and services in order to balance the interests of consumers with that of the industry.
This move will enable the culture of quality to take root in the country and production or import of substandard products and services will not be tolerated any longer, he said.
Goyal also added that Free Trade Agreements (FTAs) entered with other countries have not led to the growth of India's trade and business because of the poor quality of the products and services that get restricted with non-tariff barriers.
Reacting to the minister's announcement, Sandeep Shah, Partner, NA Shah Associates LLP said: "The government should enhance the 8-digit HSN code to 10 or 15 digit so that more specific code can be attributed. Unless the government adopts this method, it is quite possible that essential supplies which are used by hospitals or other industries which are critical may lend up paying very high duty.
"The government should release the draft code before implementing the higher tariff to avoid unintended consequences."
In terms of consequences, Ranjeet Mahtani, Partner, Dhruva Advisors, in a statement, said: "Products and services that remain within the 'others' category, could henceforth be subjected to a higher duty (for goods) and therefore costs, besides administrative inconvenience in the form of licenses and permissions."
"This proposal will impact India's trade patterns, when it has been concerned with bulging import bill, and there have been discussions on levy of a Border Adjustment Tax on imports, to adjust for non-creditable local levies to support Indian manufacturing."