Technology is playing a bigger role in Indian trade than ever before as the government accelerates reforms to eliminate archaic procedures and bureaucratic delays that continue to challenge growth.
The national customs agency this week issued a decree allowing “electronic self-sealing” services for factory-stuffed export shipments with the use of radio-frequency identification (RFID) tags, meaning cargo could be moved out without any physical inspection on-site.
The authority said all exporters enjoying “authorized economic operator” status would be permitted to use the RFID tagging process that is set to go into effect October 1.
“Under the new procedure, the exporter will be obligated to declare the physical serial number of the electronic seal at the time of filing the online integrated shipping bill or in the case of manual shipping bill, before the container is despatched to the designated port/inland container depot [ICD]/land customs station,” the notification stated.
Shippers must procure RFID sealing tags from vendors that meet specifications laid down by customs, and if the seal shows evidence of tampering, then that cargo would be subject to normal customs examination.
“The integrity of the RFID seal would be verified by the customs officer at the port/ICD by using the reader scanners, which are connected to [the] data retrieval system of the vendor,” the order stated.
RFID seals are considered tamper-proof and the new method enhances supply chain security in addition to facilitating smoother cargo flows.
“It shall lay more responsibility on the exporter for whatever he is exporting. Right now, the shipping bill does not find mention of seal numbers, so manipulations are possible,” a customs official told JOC.com. “While factory-stuffing is preferred by exporters themselves, they have a tendency to shirk their mandatory obligations.”
Customs authorities have been easing shipper requirements for exports and imports as part of a larger government plan to lower logistics costs and scale up India's ranking in the World Bank's "ease of doing business" survey. The notable reforms include the introduction of direct port delivery services, which allows pre-approved importers to pick up their import goods direct from the wharf within 48 hours of landing at the port, and a direct port entry scheme for factory-stuffed export containers that obviates the need for shippers to route such ready cargo via off-site container freight stations for verifications and obtain “let export order” clearance before they are gated in at port terminals.
Maersk Line in a previous study said indirect or hidden costs are causing a major drag on India’s trade growth, and that a 10 percent reduction in such extra costs could help New Delhi generate additional export revenues of up to $5.5 billion annually.
Amid those concerns, the RFID program is becoming a game changer for India’s dominant container ports as they work to push productivity. A recent analysis by DMICDC Logistics Data Services, which manages the RFID tool, showed vessel turnaround and dwell times are steadily improving at Jawaharlal Nehru Port Trust and Mundra.
Additionally, a nationwide "port community system" that aims to integrate all trade processes tied to delivery orders, transport orders, gate open-cut off times, delivery gate schedules, gate-in bookings, and pre-gate schedules under a single digital platform is in the works.