Concerned over the rise in imports in the ‘others’ category, Commerce and Industry Minister Piyush Goyal asked those importers to seek Harmonised System of Nomenclature (HSN) or tariff code within 30 days from the foreign trade office, failing which the government would impose strong restrictions on their inbound shipments.

Goyal said India is facing a big problem in the country’s imports of a category called ‘others’ and in that category, all sorts of stuff is being imported into the country.

Citing an analysis, he said one out of the four products being imported in India is under this category. Out of over $500 billion worth of imports in 2018-19, the ‘others’ category accounted for over $100 billion.

What is the HS nomenclature?

The Harmonised Commodity Description and Coding System generally referred to as ‘Harmonised System’ or simply HS is a multipurpose international product nomenclature developed by the World Customs Organisation (WCO).

It comprises about 5,000 commodity groups, each identified by a six-digit code, arranged in a legal and logical structure and is supported by well-defined rules to achieve uniform classification.

The system is used by more than 200 countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics. More than 98 per cent of the merchandise in international trade is classified in terms of the HS.

The HS contributes to the harmonisation of Customs and trade procedures, and the non-documentary trade data interchange in connection with such procedures, thus reducing the costs related to international trade.

It is also extensively used by governments, international organisations and the private sector for many other purposes such as internal taxes, trade policies, monitoring of controlled goods, rules of origin, freight tariffs, transport statistics, price monitoring, quota controls, compilation of national accounts and economic research and analysis.

The HS is thus a universal economic language and code for goods, and an indispensable tool for international trade.

How is it updated?

The Harmonised System is governed by The International Convention on the Harmonised Commodity Description and Coding System.

The maintenance of the HS is a WCO priority. This activity includes measures to secure uniform interpretation of the HS and its periodic updating in light of developments in technology and changes in trade patterns.

The WCO manages this process through the Harmonised System Committee (representing the contracting parties to the HS Convention), which examines policy matters, takes decisions on classification questions, settles disputes and prepares amendments to the explanatory notes. The HS Committee also prepares amendments updating the HS every 5-6 years.

Governing body of HS code in India

Any changes or formulation or addition of new codes in HS codes in India are carried out by the Directorate General of Foreign Trade (DGFT). Commodity description, weeding out of defunct codes, addition of new codes and change of product description are taken up periodically as a part of the ongoing process towards perfection.

In November, khadi marked its presence in the HS code bracket. In a long-awaited move to boost the exports of khadi, exclusively categorised from the general league of textile products, the commerce ministry allocated separate HS code for India’s signature fabric.

Govt to act tough on HS code

Speaking at the CII’s National Standards Conclave on January 15, Goyal asked the importers to approach their nearest DGFT immediately. “I appeal to everybody who is importing any product or services into the country, please categorise your product into a respective HSN code under which it falls. We will start the process to create a separate HSN code if it is not fitting into any existing code or amend the existing code,” he said.

He asked the DGFT to bring a trade notice immediately and “make it an absolute ultimatum either the import duty will be increased exorbitantly or a special duty imposed”. This measure, he said, will help the government assess what is being imported.

He also warned that no imports will be allowed without the HSN code.

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