By Snigdha Kalra
Indian research and advocacy firm CUTS International (Consumer Unity & Trust Society) said on Monday, the 12th of June, that there was a need to modernise and strengthen the export infrastructure to make Indian exports more competitive in the global market. It presented various suggestions in its report to improve facilities at land and sea ports and prevent delays in clearance which have been highlighted in this article
Major suggestions that the report had to offer
The firm said that robust export infrastructure needed to be developed otherwise trade distortions could lead to a fall in exports. Emphasising the attention that needs to be paid to connectivity and congestion problems in land and sea ports, the firm said that “special emphasis is required for capacity building of the Inland Container Depots”. Inland Container Depots are dry ports equipped for handling and temporary storage of containerized cargo as well as empties. This means that hinterland customers can receive port services more conveniently closer to their premises.
Focusing on clearance problems, CUTS said, “Containerisation and customs clearance in India still face huge challenges of delays. The process of reduction in procedural formalities has to be complemented with a proper framework for effective cooperation between the customs and other authorities.” Containerisation is a system of intermodal freight transport using intermodal containers (also called shipping containers and ISO containers) made of weathering steel. The containers have standardised dimensions.To reduce these delays and associated costs, it recommended setting up of a single window clearance system at ports.
Challenges faced by the port authorities
India has about 7500 km of coastline. The twelve major ports along this coastline handle about 60% of the total seafaring traffic and the 176 minor ports handle the remaining 40%. Container traffic at the major ports is growing year by year. It is difficult to develop new dry ports in India due to problems in land acquisition and forest clearance as well as huge rehabilitation costs.
Some of the major challenges of the current system include transportation delays due to traffic snarls in cities and delays due to a large number of formalities at clearance points. There is also a severe shortage of space in warehouses and Inland Container Depots (ICDs). Moreover, due to the absence of proper infrastructure for inter-modal connectivity (through different modes of transport), trucks are used for direct transport to and from ports. As the trucks have a lower carrying capacity, it further puts pressure on the terminals.
Today, only Jawaharlal Nehru Trust Port (JNTP) and Chennai port are handling 80% of the export traffic in India between themselves. This has led to major inefficiencies and piling up of containers on the docks. There is an acute need for programs which can help remove these shortages to improve the export system in India
Alleviating the problem at hand
The government announced a new scheme in March, called the Trade Infrastructure for Export Scheme (TIES). This scheme will finance the creation of infrastructure to boost exports. It provides assistance for the creation of ports, special economic zones, export warehousing and packaging. It replaces the Assistance to States for Creating Infrastructure for Development and Growth of Exports (ASIDE) Scheme.
Another scheme that is being implemented by the government of India is the Sagar Mala project. This project aims at transforming the existing major ports into world-class ports. The National Perspective Plan (NPP) has been laid out under this project. This plan will try to minimise the time and costs of import and export of cargo by locating bulk industries near the coast. Manufacturing clusters will also be located near ports for easy transportation.
Furthermore, the single window clearance system proposed by CUTS allows international traders to submit clearance forms at a single window. It means that they can complete all the formalities at the same location. This saves time and reduces delays in clearance of exports. Such a system has already implemented in some states such as Gujarat and Telangana. Proper implementation of these schemes in other states could help in reducing the problems of congestion and delays at Indian ports and give a push to Indian exports.
Featured image source: Flickr