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April 29, 2020

Is Digitalising Shipping Processes Enough to Improve India’s Ease of Doing Business Ranking?

India has managed to break into the top 100 countries in World Bank’s Ease of Doing Business ranking. In the latest rankings published by the World Bank, India was ranked 100. This is a major progress from the previous year’s rank of 130.

While this is an important achievement for the country, India is still lagging behind in certain important parameters like Trading across Borders, where it is ranked 146 among 190 countries.

What is Trading across Borders ranking

The Trading across Borders parameter is important as it measures the efficiency with which certain compliances associated with the import-export procedure are carried out.

For rating performance on Trading across Borders, the World Bank looks at the time and the cost attached with the logistical process involved in export-import trade of a country. 

To arrive at a ranking, World Bank studies the time and the cost (excluding tariff) attached with 3 sets of procedures namely - documentary compliance, border compliance, and domestic transport involved in the entire export-import procedure.

The digitialisation drive by Ministry of Shipping

To improve upon this facet of international trade, the Ministry of Shipping has made it mandatory to exchange/transfer trade documents - e-invoice, e-payment, and e-Delivery Order - in digital form via the Port Community System (PCS). Earlier this facility was available only for DPD container clearance at JNPT Port, but now with the latest notification (link given below), the PCS facility has been extended to all stakeholders like terminals, CFSs, ICDs, and other Major Ports where the Port Community System is available. 

The Port Community System (PCS) is the integrated web-based message exchange platform for the entire maritime community operated by Indian Ports Association (IPA).

The PCS is directly linked to ICEGate, a portal operated by the Customs to digitalise trade processes such as filing of import and export documentation, payment, and document status tracking. This will help in easy transfer of information from one system to another. (Source: Ministry of Shipping Notification)

Is it enough?

While digitizing these processes will definitely help in improving the turnaround time of the listed processes, at the same time, it is also important to note that these are not the only issues at Indian Ports that affect the turnaround time of the shipments.

According to the report, Port Logistics: Issues and Challenges in India, authorized by the Niti Aayog, published by Dun & Bradstreet (DNB) in February 2018, port congestion, shipping line issues and charges, regulatory clearances, customs clearances, documentation and paperwork are the major issues that result in detention and demurrage charges incurred by importers. In other words, these issues are responsible for causing a delay in processing shipments.

Among the points listed in the DNB report, port congestion is the main pain point. If our ports can work on improving infrastructure issues, it would be easier to implement and execute the new initiatives.

Instead of looking at these parameters separately, it would probably be better if the policy framers looked at the entire trade activity holistically – which includes documentation, shipping lines, port operations, traders, policies and laws of trade, and service providers like CFS, stevedores, rail and road transporters, and terminal operators.

A holistic approach would ensure that in an attempt to fix one problem, we would not give rise to or disrupt another sector of the trade. The loss of business and employment suffered by CFS operators providing service when the DPD model was extended to all importers at JNPT is a case in point.

To know more about Direct Port Delivery, click here.

Sources: 

Ease of Doing Business Ranking, World Bank

Trading across Borders, World Bank

Ministry of Shipping Notification

Logistics
Shipping Lines
Digitalisation
Custom Duty
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