Red tape

There are grumblings from the F1 circus in the run-up to the Indian Grand Prix about the country’s customs because teams are worried that they will have trouble flying in new parts for the weekend. This seems to involve a great deal of paperwork. The system in India is such that the Sports Ministry should issue a certificate that allows the Customs Department to issue customs exemptions for the equipment brought by competitors, but only if there is a guarantee that all equipment imported will be exported again. In the case of F1, the ministry decided that the event was “of no national importance” – a scandalous decision – which meant that the race promoter had to pay temporary import duty, which was returned – after an administration fee had been paid.

What I fail to understand is why any of this is necessary. India is a signatory to an international customs convention for the temporary admission of goods. This means that someone wishing to import and export goods can use an ATA Carnet that allows them to temporarily import goods without payment of normally applicable duties and taxes, including value-added taxes. The carnet eliminates the need to purchase temporary import bonds. So long as the goods are re-exported within the allotted time frame, no duties or taxes are due. The process is administered by the World Customs Organization and acts as an international guarantee. There are 71 countries that are signed up to the system, with almost all the Grands Prix covered by the system.

F1 equipment would come under either “professional equipment” or “goods for use at exhibitions and fairs”.

The process involves submitting an application and suitable collateral, in the form of a bond, in one’s own country, listing all the goods being moved and the countries that will be visited, and then a carnet will be issued for a year and all the foreign customs officials have to do is to stamp the necessary pages and keep a record of the movement of the goods. At the end of the year the goods related to the carnet are checked and if there are discrepancies the bond takes care of any duties required.

68 thoughts on “Red tape

      1. There aint jack bigger here than the Super Bowl, and I’d say it has ZERO national importance.
        IMO, anyone who thinks that any sporting event is of national importance, either doesn’t pay attention to anything in the news but sports, or makes his/her money off of said sporting event.

  1. “after an administration fee had been paid”

    That is the reason why it is necessary. If India followed the ATA Carnet rule then the corrupt officials wouldn’t get their admin fee to fill their own coffers.

  2. You’ve been involved in F1 too long mate.

    I enjoy F1, don’t get me wrong but in the scheme of things it doesn’t mean anything. And if this is the most pressing problem facing the sport then life must be easy in F1 indeed.

    1. I think the point is nobody appreciates a 3rd world style shakedown, especially when these countries are party to agreements for the benefits they enjoy and then they selectively respect them for a little improper taxation screwing visitors. I guess they just get pound signs in their eyes when they see those shinny cars, crooked buggers.

  3. Joe, if you have ever done business in India you become aware that while it ‘conforms’ to international trade agreements, it does so in its own unique way that requires the employment of an inordinate number of people to execute the most minor activities. the cost of employment in India is low so it is in their OWN interests to keep people employed and they need to find them things to do.
    All you can do is, shrug the shoulders, and say to the guy waiting behind you ‘India’

  4. I’m surprised that “sporting equipment” isn’t listed as a distinct category.

    Presumably there’d be a pile of paperwork to go through if you shattered a front wing and therefore didn’t re-export it? Or would teams be forced to sift through the debris cleared up by stewards to find all their carbon fibre?

  5. You’ve never worked in the logistics field in Asia then Joe? Completely agree that they SHOULD do this, but what they SHOULD do and what they actually do are two completely different worlds.

    The main issue in a lot of the countries is that their customs and tax bureaus are so strong, the central government struggles to exert any control over them and they become a law upon themselves.

    1. Funnily enough, I am an F1 journalist. No I didn’t work in the logistics field in Asia, but I have been around the block a few times and I’m not stupid. This is why carnets would work better.

    2. ” … they become a law unto themselves.
      Indeed. Witness Germany, where Customs seized a Stradavarius violin from a Japanese violinist, who had it on a brief loan from a Japanese foundation, and demanded $1.5m duties. It took huge efforts by the German Foreign Ministry – after a formal diplomatic protest by Japan – to get it released without payment.

      Now the German Customs are taking the Foreign Ministry to court for loss of income !

  6. Why is any of this necessary? It isn’t. It’s India. I’m sure that someone didn’t get their “pocket money” that they wanted several years ago… I’m just surprised that this didn’t happen in Korea, too.

      1. If they actually “observe” the laws relating to carnets. In Asia, a lot of rules are either rigidly enforced, or ignored on a wholesale basis, depending on who you piss off or “made friends with” during events that may have happened years prior.
        Costco in Korea is going through this right now…
        If India is signatory to this ATA carnet system, then I would call this a shakedown…

  7. Maybe they’re worried Grosjean will crash into everyone again and leave carbon fibre behind. That won’t be re-exported, rather it will clutter up some bins/a marshal’s home/eBay somewhere.

    1. “That won’t be re-exported, rather it will clutter up some bins/a marshal’s home/eBay somewhere.”
      No I reckon it will be re-cycled, the Indians have an incredible ability to make a living out of all kinds of rubbish, right down to sweepings of mud. (vis the recent BBC series “Welcome to India”) Quite what you can do with carbon fibre I don’t know, but I am certain they will find something to add value and a new industry will be born. (Assuming Grosjean stays in F1)

  8. It’s always been a nightmare, went over in the early 80’s with a load of tools and kit to work on the Ghandi film, airport arrival was flooded with people so no logging of tools etc. On departure there was hell to pay.

    I think we came into the old airport terminal but the new one was open on our departure a month or so later.

    Sorted out eventually, but the India import restrictions were originally designed to support Indian manufacturing companies and keep balance of payments under control, but did neither.

  9. I adore F1 but I don’t think it is a “major” sporting event at all. Even tennis, which I don’t personally like at all, has a more common following (amongst people you meet around the world). The words “national importance” could maybe apply to urgent aid being sent in, or a World Cup or Olympics, in a sporting category.

    These are not my opinions (the Olympics means nothing to me) but F1 is pretty small fry compared to *national importance*, and also compared to many other sports.

    1. As far as I am concerned if the Indians don’t think it is important, they don’t deserve to have a Grand Prix.

      1. I hate to be the bearer of bad news, but a Grand Prix is of limited importance to the majority of British people, too. It’s a sporting event, many of us love it, but that doesn’t make it of national importance.

        1. This is the kind of attitude that made Bernie Ecclestone decide that Europe was finished and that the future lies in the developing world. It is a really good idea from time to time to go out into the world and see the effect that F1 has in some countries. Until you have done it, you will not understand.

          1. You make a big assumption there, Joe! I’ve followed F1 for forty years and been to many, many races. My point is not that it’s not a major event – it is, to me and you and a number of others – but that it’s not of ‘national importance’. That I, a dedicated fan of the sport with more than a passing interest, can see this should surely tell you something? I’m not doubting your knowledge, I’m simply saying it needs putting in perspective. F1 is not that big a deal in the general scheme of things.

                1. And India has some much else going on that a non event like F1 televised globally just gets lost amongst the???

              1. Since I’m a yank living in Asia, I’d like to know which countries. Italy is really the only one I can think of next to possibly Brazil.

            1. Korea is a bad example. They put on a good show, but that’s it. All talk, no walk. The Winter Olympics scheduled in Korea really scares me.

        1. No no, the Indians do not think the Korean GP is important . . hence they are not deserving . . erm . . did I get that right? :~)

  10. Sorry, but even as a huge motorsports fan, I would never consider a Grand Prix and event of major national importance.

    A Grand Prix is merely a sporting event, albeit one awash with money, but to give it a prominent status of “national importance” is absurd and an insult to those things in life that genuinely are important.

      1. And as others have said, your closeness to Formula 1 surely removes you from the realities of the lives of many people in these territories.

        With all due respect Joe, you will go to a country to report on a Grand Prix weekend and the sport’s attached stories, but several days in a country does not in any way allow for a true perspective of a territory.

        Only the inhabitants and a government of a country can truly define what is an event of national importance.

        1. I go to these places and I see what I see. You can have your own view, but whether it is valid opinion is another question. I stand by what I said. However, I do not see any point in continuing this conversation as it is rather too airy-fairy for my taste.

    1. I agree totally. I think that Joe wishes all countries considered it important and his heart is in right place but this sport isn’t important for the majority of people in most countries. IIRC, TV viewing figures for F1 in India are on average of 2.3m but even football is more popular, let alone cricket.

    2. Yep, India has no need to demonstrate to the world that it can host a high profile international event competently, it’s not a domestic race. Countries are lining up for these events in an effort to showcase themselves and their rate of development.

  11. Strikes me that everyone’s getting caught up in semantics – the definition of national importance. I read it, in this context, as “in sport, in India, F1 has major significance” Those who want to debate F1’s importance alongside everything else in the entire world – why have you come to an F1 blog – surely you should talk to an entire world audience?

  12. I think Bernie could have eased the way here, as Joe says if it’s not important, then they don’t deserve a GP. Bernie should clarify what the customs requirements are and if they are compatible with having a race there, when he does his mega deal in each new country. The people making money out of the race might be disappointed when told “No income this year, your customs people have stopped our teams bringing equipment in so the race is cancelled” It would only need Ferrari to be wingless for a major international row to blow up, then those who deem it of no importance will be shown otherwise. I am sure that the people Bernie knows could get things changed if he really wanted. (equally sure he would deny he has any influence)

    But do the Indians accept carnets? Or will they want to unpack everything? My own experience of carnets was in europe with a high roof VW LT van full of exhibits for Auomechanika. Had the German, French and Dutch officials not merely had a horrified glance inside and just said is it all there? But instead, insisted on unloading and accounting for every item, we should still be there. (Yes it was along time ago before we were sold down the river, when we still had common sense and not health and safety)

    1. Pretty funny about the customs officials. I had a similar experience when I was racing out of Seattle. We raced at (the now defunct) Westwood outside Vancouver B.C. Our racing organization had a blanket permit/bond for members to cross the border with racing equipment, cars, etc; we just filled out a simple form and were across the border …….. except for one time when a Canadian customs official asked me exactly what ‘tools’ meant. Then he told me I had to list everything, each wrench and socket and screwdriver and spare part and ……..everything. I just looked at him and said it would take hours to do and that I couldn’t do it. We stood there for about a minute and then he waved me through. That was the good old days when you didn’t need a passport to get back into the USSR. Sigh.

    2. The Indianapolis Tyre Disgrace of 2005 should make us all think about how much F1 supremos care or know about putting on a good show.

      At the Indianapolis Tyre Disgrace, Ferrari were an incidental beneficiary (and I would hate it if followup comments referred to conspiracy). The event demonstrated cluelessness or disrespect to everyone who expected to see a Formula One race that day. The supremos insulted the organisers and volunteers, race goers, TV fans and the race sponsors. Apologies if I missed anyone out.

      The problem could have been resolved by a relaxation of the rules — “on safety grounds”. That’s a familiar expression… BCE uses his muscle rarely and selectively.

      But none of that is applicable to India, of course.

  13. Is an F1 race an event of national importance? For an answer you should ask the governments who pay for them.

    In theory, the British Grand Prix is without subsidy but a wider analysis would factor in the cost of road developments around Silverstone. Without those developments, F1 would not be at Silverstone. And the indirect subsidy for Silverstone is tiny compared to the direct race payments in other countries. In many countries, we also have to assess the political influence of race sponsors, local cliques etc.

    I think that Joe may be underestimating or understating the financial dodginess (or outright criminality) that motorsport has been used to hide in the past. Sadly, motorsport has a poor reputation for financial probity. It is inconvenient but logical that Indian officials may draw a different opinion from those in other countries (outside Europe) where F1 races.

    I’m not arguing against consideration of the logistics of F1 teams, the people who are putting on the show. But I think that the teams need to understand that India has the power to enforce trade rules as it wishes (a court of arbitration won’t get a new wing design to the team ahead of practice) and adjust to it, in the same way as anyone else who deals with India. Like the weather, Indian trade practice can’t be controlled by F1 teams, so teams just have to live with it.

    1. It’s okay, they stopped tubular chassis for monocoques, so you can’t stash any drugs or used bills in there. That put paid to universal skulduggery and laundering, no to mention siphoning simmered pinot grigio whilst on the starting grid.. Wings and winglets were invented also so as to blow away any crumpled forgeries more efficiently from the car, to penalise these dastardly wrongdoers. F1 has been perfectly clean since. The last of the pure coke was embalmed in a mannequin called Fla . . .

  14. Maybe Mallya can fix it?, who knows maybe someone in government wants to put the spotlight on the event to showcase the good doctor playing when the staff at his airline are up in arms. Not good press although Who knows how much public pressure matters in India?

  15. I am sure this sort of 3rd world nightmare could have been avoided if Bernie had asked to whom it may concern before the contract was signed that the F1 circus coming to India for one week cannot be treated like business as usual. I am also sure that this could have been done without requiring special laws. And no! The greedy F1 circus should not ask for its races to be called of “national interest” for the simple fact that, in this case, probably 99 percent of all Indians could not care less about F1. And probably 90 percent have never heard of it.
    This is a self-imposed conundrum. Don’t blame India for it.
    Mr E has sufficient bargaining clout to make this reasoning: Want an F1 event? Then give us a guarantee that you can deliver! Otherwise be informed that other “markets” are standing in the queue. Actually, I am sure he says this all the time, and it is all the more inexcusable that the teams are now facing customs related small problems with big consequences.

  16. Joe,
    We fully agree that a country which wants F1 but has customs sevices like Nigeria does not deserve F1. Irrespective of how many locals are interested in it.
    We don’t agree on the concept of national interest. We have 3rd world countries like Italy where Monza is treated as a “national interest” with everything that goes with it. The motorsports federation is headed by a guy appointed at party HQ. The company that runs Monza is controlled by regional politicians. Like in banana republics there is always a minister who doesn’t have a clue about F1 but comes to the race with a 100 ton government plane, including party friends, family, wags & neighbours. This year, as usual, the minister of the day came with the “necessary” security guards and after she had passed the badge gates where she received a waiver, plenty of other security personnel 20 m behind her presented the guns in order to get inside. The minister later sort of apologised saying that she dint not know about the “arrangements” of her security staff.
    This sort of stuff alone is a reason enough not to declare F1 events as “national interest”.
    This is of course without touching the raw nerve of public money which is a separate discussion altogether which I am sure will get us nowhere.

  17. Joe,
    Are you sure the carnet is the holy grail to passing customs? It is so legally, of course. But the local reality is something very very different.
    Bakshish will always help to oil the machine, if it doesn’t throw you in jail.

  18. (pre p.s. sorry not long, but it’s the impression, not details I meant to convey)

    Just a general thought about shipping: I became smitten by TNT, because once I was worried over a large parcel, and they gave me the cell/mobile/handy numbers of every way point manager en route. And every one was a beaut. This was only trying to get a whopping parcel of all manner, out of London, overnight to Vienna, on a bank holiday weekend both ends . .

    I promise you I’ll try Emirates before saying anything nice about them 😉

    (that really was in jest, it seems very hard to find any bad words about that airline, but they are not on my routes just now)

    So, trying to be on topic, this was noit the simplest of deliveries, and it could have fallen foul of customs regs, as I rather dimly bundled a bouquet of flowers in with some heavy paperwork, as a attempt at a apology for the inconvenience.

    Basically, having someone on the ground who knows their stuff, and having a chat with them is invaluable. No way do I mean bribing, just simple sociable talk. A little understanding of the guy or girl on the sharp end of things. Of _course all the papers were in order. All that was fine. But when I first mentioned \I needed to make an apology to a workaholic associate, the human factor kicked in.

    I’m not punting TNT as the best thing since God created air water earth and us, but it really affected me that I simply was hand held. I got information so far in advance of their “tracking system”, and gave back by contracting them for everything else for a good while. Oh, and absolutely making sure I headed up every correspondence, payment advice, and order, with the full names of the people who helped me out that weekend.

    Basically, that parcel had no reason to go through. Flowers and business files? To Austria, on a major Bank Holiday (religious observant?) I mean so many ways that could have been “de-prioritized” or just confused the people reading the waybill / docket.

    So, whichever company you use, no bribery ended, just be inquisitive about the actual person every now and then. So many people who overhear me, ask why I am “schmoozing” even my telco rep. Well, apart from just being decent, it shouldn’t be a surprise to you that phone reps keep tallies on who is a PITA or not. *Most call centers track that as matter of course, now) So it’s more than having your papers in order, because even though I know salaries are not always (really not always) insulting, people on the end of the phone, dealing with what most people don;t even bother to try to understand but are happy to complain about, well, Shock, Horror! They’re regular people. This is one area where if you apply some genuine civility, you just get back disproportionately.

    I have other but less fun, equally good stories, about other couriers. I just use the other names less often ever since. I cannot slag off the other obvious names, as there would be too small a sample I can attest to, lately. (But avoid DHL Canada to UK, or anyone who hands off to ParcelForce transatlantic, the tracking just stops, half way)

    Bottom line, my delivery was absolutely in order. It had been held because of customs complexity, basically sual contents, needed to be check – boxed on a extra form. But had I never asked if I could ask to speak to anyone, it would have been totally loose – loose. Try sending a important associate a difficult deal folder, replete with rotting flowers . . can only imagine how that would have been thought of!

    I guess my essential point, is maybe go show some love a bit more for all the people who move F1 around the globe, whomsoever has to handle it. Sometimes technically minded people are simply too technical. My experience is that’s way nicer and cheaper to be a bit hands on, than arguing the details of customs forms.

    Oh, and practical tip: whoever’s on the night shift at a distribution center is far more likely to be up for a bit of pleasant humor or chat than even I expect. I really hope that any perception of F1 arrogance has not filtered into the basic logistics, as seen by contractors. What else might be a “interesting a-hole” customer to deal with? Be good on the ground, at whatever speed..

  19. Joe – do you think this is related to Uncle VJ’s problems in India and that F1 is being “punished” as a result?

  20. I just picture Hermes from Futurama rubber stamping forms (Albeit Jamaican rather than Indian he fits a certain Indian accountant stereotype)

    I bet there are plenty of 37th Class Bureaucrat’s in Indian customs 🙂

  21. Joe – This matter with Customs in India seemed to vanish rather quietly. Do you know what happened? Did you write or comment about this anywhere? I cannot find it.

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