warehousing

The Scope of Customs Bonded Warehousing in India

Post By : Karvi Rana
Post Date : June 2, 2021
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Reading Time: 3 minutes

Although the concept isn’t very new, the lack of awareness about Customs Bonded Warehousing often keeps customers away from the benefits it can offer and undermines the scope and importance for the nation. Through this story, we hope to help you have a clearer idea of the concept and understand the right potential of bonded warehouses in India.

A customs bonded warehouse is a building, place, or area like any other warehouse. However, its connection with the customs sets it apart from a normal or a non-bonded warehouse. A bonded warehouse is authorised to store goods for a specified time under customs control. 

Import goods (also known as bonded goods) that are destined for export and yet to be allowed for home consumption by customs may be placed in a customs bonded warehouse. In other terms, it can also be called a duty-free zone for your imports and exports. 

A bonded warehouse is usually owned by the public sector or government owned companies, however, the private player can also obtain a license own to operate a custom bonded warehouse by the customs authority.

Using a bonded warehouse for your goods has many benefits over a non-bonded warehouse and it can help navigate your international import and export with ease. 

Benefits of Customs Bonded Warehousing

Following are the benefits of using a customs bonded warehouse: 

Suspension of Duties: When goods are stored at a bonded warehouse, all the duties and taxes are deferred. Any restrictions and prohibitions on the goods may be waived up to the time the goods are released for home use or exported. “The facility allows the exemption of Duty that a Customer is privileged. For example, EOU, SEZ, procurement against Duty-free License, etc.” informed Mr. Jeevan Rao Sahib, Founder & Director, Indelox a pioneer in Customs Bonded warehouse. 

As the duty payment is deferred, managing finance with tangible and intangible benefits will make a difference in the sales volume, Mr. Jeevan added. Furthermore, it allows the importers with extra time to complete the legal legwork needed to import their goods into the country without worrying about the finances. 

Long-term storage: Custom bonded warehouses are great for the long-term storage of goods. “Bonded warehouse allows the storage of goods without payment of Duty for one year from the date of Bonding, this is period enough for dilution of stock and prospect customers who need delivery of goods in the shortest of the period,” shares Mr. Jeevan.

He added that this period provides for avoiding repeat imports and thereby reduce the freight costs at a nominal extra cost of storage. In some countries, the bonded warehouse storage periods are indefinite.

Ease international Shipping: One of the biggest advantages provided by customs bonded warehousing is the convenience it provides businesses that ship internationally. “In terms of ease of doing business, the stocks are in the warehouse, pending clearance to the final customer who is not identified yet; this bonded warehouse will help to remain flexible and accommodate both customers who enjoy exemption and those who do not,” Mr. Jeevan said. 

Further explaining, he said, “In an instance where a license is required to import and is not available at the time of arrival of goods, it will enable to store the goods in Bonded warehouse and release it on receipt of the same”.

Stress-free Relations:  Bonded warehouses are stress-free storage for importers that enables them to transport goods smoothly. They are under 24-hour surveillance, deferred duties, and taxes with no rush on paperwork or payments. 

India envisions the potential for growth

The concept of bonded warehousing in India was first tried at Whitefield (Bangalore). With the growing warehousing market expected to reach $19.5 billion by 2025(as per the Research and Markets report), the concept of bonded warehousing is also catching pace in India. Considering the same, a regulation was also revisited and overhauled in 2016, enabling the licensee to manage the customs bonded warehouse more liberally with digital maintaining of Warehouse records and document, Mr. Jeevan said.

The benefits offered by customs bonded warehouses are majorly responsible for driving the growth of these warehouses and solidifying its presence across the nation. “With the exorbitant cost of operation out of FTZ for relatively very few extra benefits and limitation of the choice of location, Customs Bonded Warehouse will further find more presence across any location of the choice of importer closer to the port at which transactions are done, unlike an FTZ which are only at three locations for the whole of India and requires large investment outlay to set up” Mr Jeevan explains.

Bonded warehouses – both Public and Private – are in operation and facilities as small as 1000 sq. ft are being set up for exclusive use of importer businesses with specific material handling and storage features built-in.

Now,  more and more players are seen accepting the concept. Bonded warehousing facilities have already been made operational by CONCOR at its terminals at Tondiarpet (Chennai), Whitefiled (Bengaluru), Sanathnagar (Secundrabad), NewMulund (Mumbai), Tughlakabad (New Delhi), Dadri (Uttar Pradesh) Khodiyar (Ahmedabad), Gwalior, Khatuwas, MMLP Tihi, MMLPV (Visakhapatnam) and at other locations.

Recently, BIAL also opened its first on-airport public bonded warehouse.  More such investments are expected by both public and private players in the future.

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