Topics Covered: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.
What to study?
For Prelims and mains: Meaning, features and significance of HS code.
Context: India not to allow imports without HSN code. This will enable India’s exports to be accepted globally due to the quality of goods and services.
What does the HS code mean?- Harmonised System, or simply ‘HS’:
It is a six-digit identification code. Of the six digits, the first two denote the HS Chapter, the next two give the HS heading, and the last two give the HS subheading.
- Developed by the World Customs Organization (WCO).
- Called the “universal economic language” for goods.
- It is a multipurpose international product nomenclature.
- The system currently comprises of around 5,000 commodity groups.
HS Code is also known as HSN Code in India. Goods are classified into Harmonized System of Nomenclature or HSN. It is used up to 8 digit level.
HSN classification is widely used for taxation purposes by helping to identify the rate of tax applicable to a specific product in a country that is under review. It can also be used in calculations that involve claiming benefits.
HS code are used by Customs authorities, statistical agencies, and other government regulatory bodies, to monitor and control the import and export of commodities through:
- Customs tariffs
- Collection of international trade statistics
- Rules of origin
- Collection of internal taxes
- Trade negotiations (e.g., the World Trade Organization schedules of tariff concessions)
- Transport tariffs and statistics
- Monitoring of controlled goods (e.g., wastes, narcotics, chemical weapons, ozone layer depleting substances, endangered species, wildlife trade)
- Areas of Customs controls and procedures, including risk assessment, information technology and compliance.
Need for and significance:
Over 200 countries use the system as a basis for their customs tariffs, gathering international trade statistics, making trade policies, and for monitoring goods.
The system helps in harmonising of customs and trade procedures, thus reducing costs in international trade.