Indian Customs - Risk Management System (RMS)

Introduction

Risk Management System is an IT driven system with the primary objective to strike an optimal balance between facilitation and enforcement and to promote a culture of self compliance in customs clearances. It is intended to improve the management of the resources of the department to enhance the efficiency and effectiveness in meeting stakeholder expectations and to bring the Customs processes at par with the best international practices. An Inter Ministerial Group (IMG) headed by Secretary (Revenue) consisting of representatives from Ministry of Shipping, Ministry of Commerce, Planning Commission besides CBIC, recommended its introduction as a measure of trade facilitation and selective screening of only “high risk” cargo for customs examination. The Board has introduced the RMS in all Customs locations where the Indian Customs EDI System (ICES) is operational.

Project History

The system is designed and developed by an in-house team of officers at the Risk Management Division, Directorate General of Systems, Mumbai headed by Shri Yesodhan G. Parande, IRS to assist the field level customs officials in determining the appropriate levels of intervention of each trade transaction, based on the type of goods to be inspected or examined, making the best use of available resources, whether physical, laboratory, scanning, post-clearance audit and so on.

The RMS system design and architecture with a huge Oracle Database was built and is also being maintained by the engineers of M/s Birlasoft, a leading IT company. Thanks to remote filing using the internet web portal of Indian Customs www.icegate.gov.in, facility of e-payment and RMS, today the Indian importers are able to clear their goods within a few hours. Due to these efforts, the Indian Customs have been able to provide higher standards of service to the trading community.

Objectives

Risk Management thus helps by:

  • enhancing security by focusing efforts on “high risk” imports and detecting dangerous, prohibited or restricted goods;
  • facilitating international trade by reducing the need for physical interventions viz. inspections and examinations allowing for "fast-track" or “green channel” clearance of “low-risk” imports including imports of the clients registered under the Accredited Clients Programme (ACP);
  • protecting revenues through focused targeting and interventions;
  • reducing port congestion by reduction in the dwell time of customs clearance and elimination of complete physical inspection and examination of import cargo; and
  • contributing to a more effective and efficient allocation of customs’ resources to accelerate clearance of "low risk" imports, allowing customs to focus energies on the “high risk” imports.

Overview of the System

The RMS is an automated solution that uses econometrical modeling to identify the relevant criteria for assessing the risk associated with trade transactions.

The RMS applies criteria in a systematic manner to determine the level of risk for each transaction and assigns the levels of customs intervention according to the level of risk and available resources.

Benefits from the Project

RMS is a significant innovation serving customs administration by providing:

  • an automated approach

Consignments are assessed and risk levels designated automatically as part of the normal work process within the RMS without any need for manual intervention.

  • a focused approach

Specific and appropriate levels of intervention are assigned to each consignment on the basis of risk parameters, resulting in a more efficient and effective use of resources.

  • a dynamic approach

The RMS takes into account the results of targeting and interventions (including physical inspection, examination and/or scanning) to continually update its database, thus enabling the system to respond to the challenges of changing patterns of non-compliance.

State of Implementation

Starting with Air Cargo Complex, Sahar Mumbai in December, 2005, the Risk Management System (RMS) has been implemented in 23 major customs ports and air cargo complexes covering about 85% of India’s international trade. It has revolutionized the customs import clearance process by cutting down the clearance dwell time drastically. Instead of routine assessment and examination of all cargo, only selected consignments are now taken up for scrutiny and examination. It is a tool to balance facilitation and enforcement which has been widely appreciated by the trade. Due to the introduction of RMS, the importers have greatly benefited by way of reduction in dwell time and transaction costs, which has improved their competitiveness. There has also been considerable reduction in the need for physical interaction between importers and Customs officers. Clearances without assessment and examination and the facility of direct delivery of cargo have been given to eligible Accredited Clients of Customs. Importers today are able to plan their logistics and supply chain as per global standards and follows “Just in time” principles.

More locations and exports will be covered in the near future.

Achievements

On the occasion of Civil Services Day 2009, at a function held at Vigyan Bhavan, New Delhi on 21.04.2009, Shri Hamid Ansari, Hon’ble Vice President of India presented the Prime Minister’s Award for Excellence in Public Administration, for the year 2007-08 to the Director General of Systems and Data Management, Central Board of Excise & Customs. The award was given for the initiative “Implementation of Risk Management System in Customs”.

On the basis of the RMS targeting and interventions, Indian Customs have also collected additional revenue to the tune of Rs 2363.22crores in 2008-2009.

Based on www.cbec.gov.in (now cbic.gov.in)