Collateral prevents delays in the import process 

PD Bonds (Provisional Duty Bonds) are securities deposited against imports into India to enable conditional release of goods if the final customs assessment (Customs Valuation) has not yet been completed. These securities guarantee the Indian government that in the event of a subsequent increase in customs duties, the importer will actually pay the additional duties and any penalties incurred. 

PD Bonds in SVB procedures  

As part of an import process to India, the so-called SVB procedure takes place, in which the customs value of imported goods is checked and approved [see our blog post on SVB procedure]. Until this procedure is completed, the goods are not actually released and cannot be imported or reused. 

In order to avoid this often very significant delay in the import process, importers have the option of depositing PD bonds as security. The PD bond covers the difference between the provisionally calculated and the potentially higher final customs duties, including any penalties. 

Benefits of using PD Bonds  

  • They allow the importer to use or resell the goods before the SVB procedure is completed. 
  • You avoid months of delays and disruptions in the supply chain that could otherwise be caused by customs inspections. 
  • They also provide security for the Indian customs authorities as any outstanding claims are covered. 

If the SVB procedure shows that the actual customs duties to be paid are higher than those initially estimated, the importer must of course pay the difference. If this is not done, the customs authorities can redeem the deposited security, i.e. the PD bond. 

Conclusion 

PD Bonds are closely linked to SVB procedures as they allow importers to release their goods before customs valuation is completed, while at the same time providing security for customs authorities.  

Professional management of SVB procedures and PD bonds is therefore essential for you as an importer in order to avoid unnecessary costs and delays in customs clearance. 

Do you have any questions about the complicated customs procedures in India? Are you importing goods to India and would like to optimize your process? Feel free to contact us without obligation and talk to us.