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TaxTMI 
Risk Management System (RMS) in Indian Customs: A Game-Changer or a Bottleneck?
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....isk Management System (RMS) in Indian Customs: A Game-Changer or a Bottleneck?<br>By: - YAGAY andSUN<br>Customs - Import - Export - SEZ<br>Dated:- 1-7-2025<br>1. Introduction With India aspiring to be a global trade hub, Customs modernization is a critical pillar of reform. The Risk Management System (RMS), introduced in 2005 and continually evolving, was designed to expedite clearance for compli....
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....ant importers and exporters while focusing scrutiny on high-risk shipments. But nearly two decades later, a key question remains: Is RMS truly a game-changer in trade facilitation, or is it creating new bottlenecks in the name of risk control? 2. What is RMS in Indian Customs? The RMS is a data-driven decision-support system that profiles importers, exporters, commodities, and shipping routes t....
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....o assess risks. Based on this risk analysis, shipments are: * Facilitated (no examination) * Subject to documentary checks * Directed for physical examination It applies to imports and exports and is deeply integrated into systems like ICEGATE, Single Window Interface for Facilitating Trade (SWIFT), and Faceless Assessment. 3. Game-Changer Aspects of RMS ? A. Trade Facilitation & Speed ....
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....* Over 80% of Bills of Entry are cleared without physical inspection. * RMS has helped reduce the average dwell time for cargo at ports significantly. * Contributes to India's improvement in the World Bank's Ease of Doing Business Index. ? B. Resource Optimization * Customs officers can focus on high-risk or suspicious consignments, rather than checking all cargo. * Promotes targeted enfo....
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....rcement, improving efficiency and detection quality. ? C. Promotes Voluntary Compliance * Encourages businesses to maintain clean records for faster clearances. * Supports Accredited Economic Operator (AEO) scheme integration. ? D. Facilitates Paperless and Contactless Customs * Works in tandem with Faceless Assessment, e-Sanchit, and digital document exchange. * Crucial during the COVID....
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....-19 pandemic for uninterrupted trade. 4. Bottlenecks and Pain Points ?? A. Over-Dependence on Historical Data * RMS uses past behavior and profiles for risk scoring. New or small importers often get flagged due to lack of history. * Ignores real-time intelligence or dynamic trade risks. ?? B. Lack of Transparency * Importers rarely understand why a shipment was flagged or examined. * Th....
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....is opacity undermines trust and raises questions of discretionary enforcement. ?? C. Systemic Delays in Some Cases * When RMS flags a consignment, the time taken for manual assessment and examination can be significant. * Defeats the purpose of facilitation, especially if high-volume shipments are affected. ?? D. Quality of Risk Parameters * Industry has raised concerns over inconsistent r....
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....isk triggers-similar consignments get different treatment at different ports or times. * Leads to unpredictability and increased logistics costs. ?? E. Interplay with Faceless Assessment * Faceless Assessment + RMS sometimes creates a double filter, causing unexpected delays. * Risk management parameters may clash with regional understanding of commodity behavior. 5. Recent Developments an....
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....d Enhancements * Machine Learning Integration: New initiatives aim to make RMS smarter and more responsive to fraud trends. * National Assessment Centres (NACs): Better coordination and uniformity in assessment decisions. * Post-Clearance Audit (PCA) linkage**: Facilitated cargo may be audited later, ensuring a balance between facilitation and control. 6. The Way Forward ?? Refine Risk Par....
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....ameters * Regularly update risk criteria using AI, big data, and global trade alerts. * Incorporate real-time intelligence instead of relying only on historical profiling. ?? Enhance Transparency * Notify traders why RMS has flagged a consignment and provide dispute resolution avenues. ??? Build RMS for MSMEs * Create a sandbox RMS approach for small traders and new businesses, preventin....
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....g automatic high-risk categorization. ?? Improve Stakeholder Communication * Publish periodic data on facilitation rates, risk profiling metrics, and examination trends. 7. Conclusion: Game-Changer, But Needs Fine-Tuning The Risk Management System is a powerful trade facilitation tool, credited with revolutionizing Indian Customs' ability to process rising cargo volumes efficiently. However, ....
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....to truly be a game-changer and not a bottleneck, RMS must evolve into a transparent, intelligent, and inclusive system, adapting to new risks and supporting a broader range of businesses. A smart RMS doesn't just identify risk-it minimizes friction. *** <br> Scholarly articles for knowledge sharing by authors, experts, professionals ....