indias-port-infrastructure-an-analysis

Context: India’s exports in April 2020 contracted by 60% year-on-year. 

Background:

  • Fall in units handled by JNPT:
    • There was a 37?ll in the twenty-foot equivalent units handled by the Jawaharlal Nehru Port in April 2020 as compared to April 2019. 
  • Unpredictable pandemic effect: 
    • The operations of multiple stakeholders in the logistics and trade ecosystem including customs brokers, shipping lines, freight forwarders, transport operators, port custodians, container freight stations and border management authorities have been restricted.
    • Changing dynamics: As countries slowly emerge out of this, new demand and supply chains will form, that will be located in countries that re-orient their existing trade structures.
  • Cross-border trade has been a key area needing reforms flagged by the World Bank in its ease of doing business reports. 

A twenty-foot equivalent unit (TEU) is a shipping container whose internal dimensions measure about 20 feet long, 8 feet wide, and 8 feet tall. 

  • It can hold between 9 and 11 pallets, depending on whether they are standard pallets or EUR-pallets. 
  • Two TEUs have the capacity of a single FEU.

 

Recent govt. initiatives to improve the port ecosystem: The government is focusing on measures for upgradation, digitisation, automation of the clearance process so that it is more automated, online and paperless.

  • It is also ensuring effective logistics and smooth export-import (EXIM) procedures at Indian borders.
  • India’s ratification of the Trade Facilitation Agreement of the World Trade Organization in 2016 reforms focused on infrastructure upgradation, digitisation and automation. 
    • TFA sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
  • Direct Port Entry is a scheme of Customs to reduce release time and cost in case of exports. Under this scheme, export containers are allowed direct entry into the port terminal prior to granting Let export Order (LEO).
  • Direct Port Delivery at JNPT: Instead of waiting for the consignment to be shifted to a CFS, importers can complete the customs clearance process at the port and take direct delivery of their consignments. 
    • Here, the importers have to arrange for clearance of the entire shipment and transportation of the same from the port within 48 hours of the shipment being offloaded at JNPT port
  • The Radio Frequency Identification system: The RFID tagging and tracing procedure enables exporters and importers to track goods in transit through the port to inland container depots, container freight stations, and to end-users, thus lowering logistics costs, due to improved predictability and optimization of cargo flows.
    • India is expanding its radio-frequency identification (RFID) technology-enabled container tracking service to more terminal locations.
  • Single Window Interface for Facilitating Trade, were all aimed at reducing the time and cost of clearance of goods. 
  • e-SANCHIT (e-Storage and computerised handling of indirect tax documents) 
    • The Central Board of Excise & Customs (CBEC) has introduced e-SANCHIT, which is an online platform for paperless processing, uploading of documents.
    • This is a single-window for Indian Customs clearance that allows importers and exporters to upload their clearance documents.
    • The new interface is proposed to reduce the dependency with the government authorities, thereby reducing time and cost of operating business in India for exporters and importers.
  • The Port Community System was aimed at seamlessly integrating all maritime trade-related stakeholders on a single platform. 
    • The Port Community System (PCS), an e-commerce portal, was introduced by the Indian Ports Association (IPA).
    • Efforts are already underway to shift to PCS1x, an upgraded version of the programme.

Outcomes of the initiatives:

  • Improvement in ‘Ease of doing business’: There is continuous improvement in India’s Ease of Doing Business ranking, particularly in the ‘trading across borders’ parameter on which it ranked 68 in 2020

Gaps to be filled:  These are particularly with respect to 

  • Awareness and acceptability of new initiatives among the users which depends on the adaptability and ease of linkage between multiple systems.
    • Lack of connectivity/message exchanges among users results in delayed cargo clearance. 
  • The standardisation and coordination of processes across ports
    • Delay in moving to a paperless trade ecosystem: Technical glitches result in limited use of the system or parallel use of hard copy. For example, the absence of a shipping line delivery order in customs and terminal systems results in usage of hard copy for cargo movement. 
    • Issues with training and capacity building amongst the users, restricts the optimal utilisation of digital platforms.

Way forward: While some immediate steps are needed to survive the crisis, it is imperative to work on a permanent road map which addresses some of the gaps highlighted. Globally, digitisation of procedures and lower human intervention are the two major pillars that drive trade across borders. 

  • Trade facilitation measures to expedite the movement, release and clearance of goods.
  • Upgrading digital platforms: The present crisis presents an opportunity to develop new systems and enhance existing platforms while at the same time changing the attitude of stakeholders on the ground.
  • Enhanced integration of systems and coordination between users should ideally result in exchange of messages and sharing of input data between them on a real-time basis. 
  • Promoting use of a multi-stakeholder single platform like the Port Community System can streamline EXIM procedures, moving towards a digitally engaged and enhanced trading environment.
  • Lesser human contact: The steep decline in world trade lays bare the significance of a more digitised trading environment, with minimal manual touch points.

These efforts will be instrumental towards improving India’s trading ecosystem and achieving the desired target of Ease of Doing Business (ranking under 50) set by the Prime Minister’s Office. The more digitised our trade facilitation infrastructure, the more immune we will be to future disruptions.

Image Source: https://www.ft.com/