Bureaucratic trade process in India triggers unnecessary fuel panic in Bhutan

On the evening of 13 June, 2022 Thimphu and other places started witnessing long lines of vehicles and even people carrying containers lining up outside fuel pumps as a rumor spread that fuel would soon not be available.

The rumor started when fuel trucks were held up at Jaigaon customs due to some changes in the registration system for all Indian exporters and importers.

All companies or individuals in India need an Import-Export Code (IEC) while importing or exporting goods for customs purpose.

Within the IEC, an important component for companies or dealers is an Authorized Dealer Code or AD Code which is a basically a code of digits given by the bank to a person who has a current account in the bank for trade payments and receipt for foreign currency.

In the earlier system, companies in India would have multiple AD Codes with different bank current accounts attached to the Codes.

At the time the customs would get the AD Code registered.

Under the new system only one AD Code can be registered at any port with one current account and there is an option to change ports, but it has to be the same code and current bank account attached to it.

Also, unlike the earlier system where the customs office would do the AD code registration, the new system requires the importer or exporter to go on a website do it on its own.

The idea behind it is to make trade simpler with a single code and at the same time also enhance the ability of the Indian Customs to monitor what is coming in and going out along with the current bank accounts linked to it.

However, the confusion happened at Jaigaon as the PSU fuel companies firstly were not aware of this and had not registered, and when they became aware they had to rush to people who knew how to do this and wait for 72 hours for the code to be generated.

An official from the Department of Trade said that the department had already clarified several times that the delay of fuel trucks was over the registration issue that has now been resolved, but people are still unnecessarily panicking.

The IEC and the AD code registration is part of the larger GST Tax implementation in India.

The temporary issue has led to even some speculation and rumors on if this was intentional, but an official from the Ministry of Foreign Affairs who is familiar with the issue said that these are just rumors and not true.

The official said that it is part of India’s efforts formalize trade on many fronts and make trade go through a systematic process. The official said it is purely a technical and bureaucratic issue and there is nothing more to it.

A source in Jaigaon who is also familiar with the issue said that since the inception of GST in India the exporters of fuel to Bhutan have used multiple current accounts or AD Codes including for Nepal and Bangladesh.

He said this was becoming a burden for the Indian government to monitor over issues of financial billing or financial transparency.

This has now changed with the single AD Code and a single current account linked to it.

He said this was not deliberately done as this is how the bureaucracy operates in India and even in the past notifications have come in suddenly leading to everyone scrambling with even customs officials unaware and having to catch up.

In this case too the notification came in suddenly and caught the customs officials by surprise including the PSU companies leading to the few days delay.

The customs in Jaigaon can only issue the shipping bill to export, once the PSU dealer registers the AD Code by themselves and comes with the code to the customs. This is now done for the PSU companies and fuel trucks are coming in.

Another official in Thimphu said it more due to do with inefficiencies on the ground than any malafide intentions.

This mass panic in Bhutan is also in the backdrop of rising fuel prices domestically and internationally and also an earlier viral WeChat audio of the Foreign Minister Dr Tandi Dorji saying it may even be difficult to get fuel in the future. However, the minister had clarified that his statement had been taken out of context and shared without his consent.

The MoEA Minister Loknath Sharma said that under no circumstances will there be a fuel shortage.

In the meantime, as vehicle owners stubbornly like up at fuel pumps despite smooth flow of trucks, the only beneficiary will be fuel pump owners who are seeing record sales and revenue.

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