India: Multi-transhipment law in the works

A vessel from Dubai may soon be allowed to offload at Nhava Sheva port in Maharashtra and re-load cargo from there for shipment to Colombo, if things to according to the government’s plan.

The plan, part of the ‘ease of doing business’ initiative, seeks to cut cost and time for exporters, while importers will have a legal backing with the government working on a multi-transhipment law. The law, which is in the works, will allow re-loading of cargo on the same vessel, switch from larger to a smaller vessel and moving vessel through a foreign territory.

“The idea is to give exporters and importers complete freedom for movement of goods – operational freedom, transport and trans-shipment freedom. A law is being drafted to allow multi-transhipment by the seaside. Currently, if a vessel is coming from Dubai to say Nhava Sheva has to go back after offloading cargo. The initiative will allow it to go all the way to its next destination,” said a government official.

The Customs department, which is under the finance ministry, is working closely with the shipping ministry, to give shape to the initiative.

Today, even if a cargo is offloaded at Nhava Sheva, the shipments have to be transported to the Kolkata or Cochin port through railways or by a truck – comparatively a more time-consuming process involving higher costs. However, according to the plan, the vessel after offloading the goods meant for Nhava Sheva will be allowed to go up to Cochin or Kolkata in the same vessel or by re-loading goods into a smaller vessel.

“Poor roads infrastructure significantly affects exporters and importers to transport from one port within the country to another. Transportation by sea is the easiest. The idea is to allow exporters and importers use the sea route extensively. It will also help boost exports,” said another official.

The government is working to allow coastal goods to travel through foreign territory as well. “The shape of our country is such that coastal goods will have to pass through the Sri Lankan territory. We’re planning to allow that. We’ll give complete freedom to exporters / importers to offload and reload at any place or choose any ship,” said the official cited above.

An exporter wanting to send goods to Vietnam from Dubai might be able to land in Nhava Sheva and re-load to a smaller vessel for Vietnam as sometimes bigger vessels do not go to smaller ports unless there is traffic and capability. Besides, Indian exports could get a leg up as a vessel offloading goods at Cochin might re-load Indian goods to be transported to, say, Singapore.

This was not allowed now due to tracking constraints faced by the Customs department due to structure involving manual clearance. Now with the system moving online, tracking has become much easier, which might help the Customs department crack down on smuggling attempts.

“Tracking shipments requires huge system so that every container can be identified. For instance, if there is a change of vessel, we’ll need to keep track of all those at each stage. Therefore, we are preparing a law that will regulate it,” said one of the officials quoted above.

In another trade-friendly measure put into effect from April 1 this year, the government launched the Single Window Interface for Facilitating Trade, or SWIFT. Thanks to this, importers and exporters are now required to fill only one form at Customs ports for clearance from all agencies including the Food Safety and Standards Authority of India, Drug Controller General of India, Plant Quarantine and Wildlife Crime Control Bureau.

Source: Business Standard