Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

Harmonized System (HS) Code


From UPSC perspective, the following things are important :

Prelims level : HS code

Mains level : Khadi and cottage industries in India

  • The Ministry of Commerce and Industry allocated a separate Harmonised System (HS) code for Khadi.

HS code

  • The Harmonized System, or simply ‘HS’, is a six-digit identification code developed by the World Customs Organization (WCO).
  • Called the “universal economic language” for goods, it is a multipurpose international product nomenclature.
  • 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 harmonizing of customs and trade procedures, thus reducing costs in international trade.

What makes the 6 digit code?

  • A unique six-digit code has numbers arranged in a legal and logical structure, with well-defined rules to achieve uniform classification.
  • 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.
  • The HS code for pineapple, for example, is 0804.30, which means it belongs to Chapter 08 (Edible fruit & nuts, peel of citrus/melons), Heading 04 (Dates, figs, pineapples, avocados, etc. fresh or dried), and Subheading 30 (Pineapples).

Significance of the move

  • Khadi is India’s signature handspun and hand-woven cloth that was made iconic by Mahatma Gandhi during the freedom struggle.
  • The move is expected to boost Khadi exports in the coming years.
  • In 2006, the government had given the MSME-controlled Khadi and Village Industries Commission (KVIC) the Export Promotion Council Status (EPCS).
  • Yet, the absence of a separate HS code hindered Khadi from achieving its full potential, as its exports were difficult to categorise and calculate. The latest move is expected to help resolve this issue.
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