HSN codes

Mar 2, 2023

HSN stands for Harmonized System of Nomenclature. This system is meant for the uniform classification of products worldwide while also acting as a base for customs tariffs and was developed by the World Customs Organization (WCO) in 1988. 

HSN code is regarded as the global standard for product names. HSN codes provide a standardized way to describe goods and their associated tariffs, helping global governments to streamline trade and reduce bureaucracy. Being a 6-digit uniform code, HSN code is used to classify 5000+ products and is universally accepted.  

In India, HSN codes are used under a three-tiered scheme as a result of the implementation of the GST. Their applicability can be explained in the following manner:

  • Businesses with a turnover of less than Rs. 1.5 crore: Not requirement of using the HSN system

  • Businesses with a turnover ranging from Rs. 1.5 crore to Rs. 5 crore: Should use 2-digit HSN codes

  • Businesses with a turnover of more than Rs. 5 crore: Should use 4-digit HSN codes

  • 8-digit HSN codes should be used by businesses that deal in the import and export of commodities

These codes must be mentioned when a business registers for GST, on all their sale invoices, and on GST returns which businesses need to submit on GST Portal.

A product (Good or Service) is classified under sections, chapters, headings, and subheadings

            HSN Code format - [xx]         [xx]           [xx xx]

                                            Chapter    Heading   Subheading

Following example will help everyone understand the HSN code structure:

HSN - 62.13.90 refers to the Textile Handkerchiefs.

  • 62 – First two digits of this code represent the chapter number that deals with articles of Apparel and Clothing (excluding knitted or crocheted clothing)

  • 13 – Next two digits represent the heading number that deals with handkerchiefs

  • 90 – Last two digits represent the product code for handkerchiefs made of textile materials

In India, HSN code for the same product designated for EXIM trade would include 2 more digits

  • would be the HSN code for handkerchiefs made of man-made textiles

  • would be on the other hand if the products are made from silk or silk waste. The HSN code's final two numbers in this instance represent silk or silk waste.

For MSMEs and exporters, using correct HSN codes can help them improve supply chain efficiency and reduce costs as tariff and non-tariff measures globally are applied on HSN codes. By ensuring that products are properly classified, businesses can avoid delays in customs clearance and minimize the risk of goods being held or confiscated. This can help to ensure timely delivery of goods and maintain customer satisfaction.  In addition to facilitating trade, HSN codes can also help businesses to understand market trends and identify new opportunities. 

By tracking the demand for certain products within specific HSN categories, MSMEs and exporters can better target their marketing efforts and capitalize on emerging markets.  

Overall, understanding and correctly applying HSN codes is crucial for MSMEs and exporters to navigate the global marketplace. By simplifying trade and improving compliance, HSN codes can help small businesses to compete on a level playing field with larger enterprises. 

Non-Tariff Measures

Mar 2, 2023

Non-Tariff Measures (NTMs) are government regulations that affect trade but do not involve tariffs. These can include standards, certifications, and technical regulations, among others.

The term “non-tariff measures” (NTMs) covers a diverse set of measures in terms of purpose, legal form and economic effect. NTMs include all regulatory measures other than tariffs and tariff-rate quotas that have direct impact on global trade. 

These measures can be broadly divided into 3 groups. 

  1. Technical Measures: this includes regulations, standards, testing and certification, primarily Sanitary and Phytosanitary (SPS), Technical Barriers to Trade (TBT) measures and Pre-Shipment Inspection and Other Formalities.

  2. Non-Technical Measures: this includes quantitative restrictions price measures, forced logistics or distribution channels, etc. A list of these measures is mentioned below:

  • Contingent Trade-Protective Measures

  • Non-Automatic Licensing, Quotas, Prohibitions And Quantity-Control Measures Other Than For SPS Or TBT

  • Price-Control Measures, Including Additional Taxes And Charges

  • Finance Measures

  • Measures Affecting Competition

  • Trade-Related Investment Measures

  • Distribution Restrictions

  • Restrictions On Post-Sales Services

  • Subsidies (Excluding Export Subsidies Under P7)

  • Government Procurement Restrictions

  • Intellectual Property

  • Rules Of Origin

  1. Exports: this includes Export-Related Measures.

NTMs impact especially exporters and importers in developing and least developed countries (LDCs) who struggle with complex requirements. Businesses in these countries often have inadequate domestic trade-related infrastructure and encounter administrative obstacles. 

NTMs that are not typically considered to be very limiting can pose significant burdens in LDCs. In addition, the dearth of export support services and insufficient access to information on NTMs impede the international competitiveness of firms. 

As a consequence, both NTMs applied by partner countries as well as domestic burdens have an effect on market access and prevent firms from seizing the opportunities created by globalization.

For MSMEs and exporters, complying with NTMs can be a major challenge, but it is also crucial for maintaining market access and competitiveness.  Complying with NTMs can be particularly difficult for MSMEs and exporters, who may lack the resources to navigate complex regulations and requirements. However, failing to comply with NTMs can result in penalties, loss of market access, and damage to a company's reputation. 

Therefore, it is important for businesses to develop strategies for managing compliance with NTMs.  One way to manage compliance with NTMs is to invest in quality management systems (QMS) and certifications such as ISO 9001 or ISO 14001. These can help to ensure that products meet the relevant standards and regulations, and can also enhance a company's reputation for quality and sustainability.  

Another strategy for managing compliance with NTMs is to work with industry associations and other stakeholders to stay informed about changes in regulations and requirements. By staying up-to-date on the latest developments, businesses can anticipate and prepare for changes, minimizing the risk of non-compliance. 

Finally, MSMEs and exporters can also leverage technology and data to streamline compliance with NTMs. By automating compliance processes and using data analytics to track regulatory changes, businesses can reduce the time and resources required to comply with NTMs, while also improving accuracy and reducing the risk of errors.  Overall, managing compliance with NTMs is a key challenge for MSMEs and exporters, but it is also essential for maintaining market access and competitiveness. 

By investing in QMS, staying informed about regulatory changes, and leveraging technology and data, businesses can successfully navigate the complex world of NTMs and emerge as leaders in their industries.

Helping MSMEs navigate and comply with Non-Tariff Measures using technology is one of our key product goals. We believe technology can bring transparency in global supply chain and can help in creating cross-border trust amongst local and global players. If you are an existing or potential Indian Exporter looking to build trust in foreign markets, then please download and check out our app.


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WeWork Raheja Platinum

Sag Baug Road, Off Andheri - Kurla Road, Marol, Andheri (E)

Mumbai - 400059


© 2023 Tradepenetrate Pvt. Ltd.


WeWork Raheja Platinum

Sag Baug Road, Off Andheri - Kurla Road, Marol, Andheri (E)

Mumbai - 400059


© 2023 Tradepenetrate Pvt. Ltd.