Take the ride
7 Jun 2015 9:59 PM GMT
A recent government study has shown that freight transport time and rates from India to Russia and other CIS countries are expected to drop considerably alongside leading to development of trade in the International <g data-gr-id="123">North South</g> Transport Corridor (<g data-gr-id="122">INSTC</g>) due to a new route. The Federation of Freight Forwarders’ Associations in India (FFFAI), on behalf of the Ministry of Commerce, had conducted a successful dry run study on the (<g data-gr-id="124">INSTC</g>) in which they had dispatched a container on the NhavaSheva – Bandar Abbas (Iran) – Baku (Azerbaijan) and NhavaSheva – Bandar Abbas – Amirabad (Iran) – Astrakhan (Russia route via the Caspian Sea in August 2014 and followed the shipments to identify the bottlenecks in this corridor.
This is an alternative route to CIS countries than the conventional route via European base port and St Petersburg. The FFFAI discovered that the +INSTC was 30 per cent cheaper and 40 <g data-gr-id="141">per cent</g> shorter than the current conventional route and successful activation of the corridor will help reduce dwell time and transaction costs by connecting India to Russia within 16-21 days at competitive freight rates leading to development of trade in the <g data-gr-id="140">INSTC</g>. It is also expected to eliminate usage of reefer containers for agro commodities and support supplies to Russia. The FFFAI, after successful completion of this study, submitted a detailed report of the findings to the Ministry of Commerce which has approved it.
Meanwhile, excited by this study report, logistics players at the recently-concluded FFFAI ‘Biennial Convention’ in Mumbai are riding a new business high alongside eagerly awaiting the execution of goods and services tax (GST) at the earliest, though also being cautious about some gaps needed to be filled before it is rolled in. The Convention, which drew wide participation from stakeholders in the EXIM Trade, Chambers of Commerce, Forwarders, Shipping Lines, Ports and Government officials from 13 member countries of <g data-gr-id="104">INSTC</g>, Turkey and Oman – focused on the huge potential and opportunities in trade between members of <g data-gr-id="105">INSTC</g> countries, and awareness of Industry Dynamics while providing a platform for sharing best practices and standards alongside discussing and resolving industry issues.
The Convention looked forward to notable announcements on GST – Implementation and changes, Delhi-Mumbai Industrial Corridor, “Make in India,” ‘Ease of doing Business,” inland waterways and coastal shipping, besides other topics with the emphasis on developing dedicated freight corridors and expansion of rail network to improve velocity of domestic trade, which in turn would reduce the uncertainty of international trade also. There is a plan to develop 24 cities in this corridor – alongside the call for Make in India – “Ease of doing Business” by the Government of India being pursued at all levels with the government setup and other stakeholders. This will intensify India’s engagement in the Global Value Chain and global trade through increased focus on manufacturing – especially in the defence sector that is envisaged to boost the logistics sector. Nuclear Power Plants, thrust by <g data-gr-id="107">government</g> in energy self-reliance, are expected to trigger import of power plants and ancillary equipment like never before. Inland Waterways and Coastal Shipping are expected to witness <g data-gr-id="211">tremendous</g> increase in movement of goods through inland waterways and coastal shipping to reduce <g data-gr-id="212">dependence</g> on overburdened road infrastructure, according to Convention officials.
Highlighting the need for exploring new routes while speaking at the Convention, Guruprasad Mohapatra, Joint Secretary, Ministry of Commerce, said, “CIS countries are important trade partners of India. The bilateral trade between India and CIS region has increased from $8,346.15 million in 2010-2011 to $11,054.02 million in 2014-2015.”
With the Convention being themed “Inspired India – Surging Ahead On Agile, Adept, Accelerated Logistics,” the FFFAI – which is the oldest and the Apex Body of Custom Brokers and Freight Forwarders controlling ninety <g data-gr-id="117">per cent</g> of India’s international logistics trade – focused on various other issues that witnessed decisions on: Opening of a Call Centre; Technology for Seamless Credit Flow; and Rate of GST & Place of Supply.
Kickstarting the Convention, Maharashtra Chief Minister Devendra Fadnavis described it as a privilege for the convention being organised in Mumbai and felt this was the right time with inspiration being the beginning of India’s growth story. “We have an opportunity to be a manufacturing hub through Make in India and you can become leaders of the growth story as it is dependent on a few pillars of <g data-gr-id="102">industry</g> of which Logistics is one. With the GST being passed, we have a lot of hopes. Countries around the world want to invest in India and the government is providing measures for doing seamless business,” he said
Fadnavis said, “The Maharashtra government is coming up with an integrated logistic park at Bhiwandi in Mumbai. The development is ready and soon a state-of-the-art facility will be developed to boost your industry. GST will also open doors for <g data-gr-id="97">industry</g>. We are focusing in Maharashtra at Aurangabad and Nagpur, besides the Delhi-Mumbai industrial corridor providing lots of opportunities in the pipeline. Developing major big ports is also a focus and we will look into cargo handling so as to increase it multifold. Special Purpose Vehicles (SPVs) are involved in trying to develop railway connectivity to ports. I am keen to know about FFFAI’s aspirations as we all want Maharashtra to grow and will proactively take measures to deliver your industry roadmap”. Rajiv Kapoor, Commissioner, Service Tax, said, “Seamless flow of credit is the biggest factor. Once GST is implemented, credit flow will be benefitted. The players will also have to build more and larger warehouses which will add to the capacity and create more businesses. With this, it will also add to ease of movement of <g data-gr-id="106">inter-state</g> goods.” Malini Arjun, Partner, BMR Advisors, said, “GST will bring a transformation of practices for all stakeholders and GST rates will differ in different states. Reviewing prices of Goods will be also on the agenda. GST will help in providing a transparent system of pricing.”
A panel discussion on “Adapting to Make In India” saw Shantanu Bhadkamkar, Chairman of International Federation of Customs Brokers Association (IFCBA), and MD of ATC Clearing & Shipping, stating, “Make in India is at centre-stage amongst all policies defined by the Government of India. All stakeholders should come together on one platform to make the initiative a fool-proof one.”
“However, structuring the data and analysing the data is the need of the hour,” D K Singh, Additional Director General Foreign Trade, said while pointing out that opening of a call centre to address all issues of the stakeholders would be a wise move.
Debashish Dutta, President, FFFAI, had said, “The convention theme is based on Make in India programme driven by our government. Logistics is the pre-requisite for Make in India to succeed and this convention will provide food for thought for policy makers”.
Noting that this convention was held in Mumbai after 14 years, Ashish Pednekar, Convenor, urged the government to fast-track infrastructure projects and create logistic hubs in major cities. Subhash Desai, Maharashtra Minister for Industries, said, “We are keen to create an ecosystem for industrial development and customs brokers have a greater role in taking the cause ahead for <g data-gr-id="243">growth</g> of the industry. Mumbai is the maritime capital and the convention will come up with innovative ideas to grow the trade.”
Describing as “a Lion’s Step” Prime Minister Narendra Modi’s “Make in India” national programme designed to facilitate investment, foster innovation and build best-in-class manufacturing infrastructure, Amit Kamat, Secretary, FFFAI Convention 2015, queried, “Can India’s logistics industry strive for a lion’s share of this lion’s step? The FFFAI anticipates that with <g data-gr-id="254">focus</g> being placed from <g data-gr-id="255">top</g> most level on reviving the manufacturing sector in the country, it will take <g data-gr-id="256">couple</g> of years for the results to yield for this effort. Logistics is the fulcrum of global trade. The FFFAI is working actively to provide the requisite <g data-gr-id="258">mind-set</g>, skill, technological roadmap and develop execution ability to handle the next growth curve in <g data-gr-id="253">economy</g>. This will help in reduction of transaction cost and provide efficient movement for manufactured products within and outside the country”.
Rajesh Alreja, Vice-President, Godrej and Boyce Mfg. Co. Ltd, observed that lack of shipping facilities on Indian coast and no Barge movement for lifting Heavy lift Projects Cargo on Inland Waterways of India was leading to exorbitant costs and making India globally uncompetitive.
“Poor infrastructure was noticed at the small ports, which are under the control of the state governments and are lacking road and rail connectivity”, he said while urging for a Berth reserved solely for movement of Coastal Cargo without any hindrances being faced, either from the Custom Authorities or their Regulators.
India’s coastlines
India has one of the most beautiful coastlines – about 7,500 <g data-gr-id="298">kms</g> including some virgin territory – in the world and we should be able to allow movement of passengers to travel within states by the sea route, and hence promote “RORO” services wherein trucks, containers and passengers could be accommodated, said Mark Fernandes, Director, Sylvester & Co, and FFFAI 2015 Session Chairman, for Inland Waterways and Coastal Shipping. “Coastal and inland waterways in India are greatly under-utilised and the Government needs to wake up to the massive loss to it and the travelling public in the benefits that could be obtained from it. For example, in the country’s economic hub of Mumbai itself, it takes four hours by road to travel from Mumbai to Alibag – a hugely popular seaside resort town – whereas it takes barely 20 minutes for the same distance by sea-route.
Unfortunately, till date, vessels used for transporting passengers belong to the 1930s-1940s era and not to the 21st century where hi-speed crafts and catamarans are deployed globally. So the Indian government needs to subsidise and extend all facilities <g data-gr-id="287">like:</g> 1) capital goods like sea crafts, inland waterways crafts etc – where imported – to be free from red tape, huge duty structures and restrictions and manning restrictions. 2) <g data-gr-id="295">Bunkerage</g> for these vessels should be supplied at international rates, and not at domestic rates which are 300 <g data-gr-id="296">per cent</g> marked up with taxes etc. 3) All ports – whether major or state-owned – must have one berth reserved solely for coastal crafts and the tariff should be the same 25 <g data-gr-id="297">per cent</g> charged for international shipping vessels. If all of this is done, the mode of transport from road and rail to coastal and inland waterways will witness a sea change.”
“Sadly, the neighbouring erstwhile Portuguese – and now Indian – territory of Goa does not possess even a single Marina to house the thousands of yachts sailing their course across the world on their sea-going voyages. A Marina comprises <g data-gr-id="275">area</g> where 300 to 500 boats and yachts can be parked safely and has common facilities restaurants, which generate foreign exchange as well create jobs.”
Goa and its steamers
Goa was famous for its Steamer service that plied between Mumbai and Goa and took nearly a whole day of travel following pit stops at ports along the Maharashtra coast before finally docking the Panjim — the capital of Goa. The service was totally stopped when the Steamers were taken off to ferry the Indian Peace Keeping Force (IPKF) to Sri Lanka in the 1990s. Catamarans tried to do the job but failed miserably with passengers <g data-gr-id="366">heaving</g> their insides in rhythm with the waves outside on the eight-hour route. Now comes the good news that a ferry service between Mumbai and Goa is to begin shortly.
The chairman of <g data-gr-id="367">Murmugao</g> Port Trust, Cyril C George told the media in Mumbai on April 7, 2015 that the ferry service will cater to the tourists commuting between Mumbai and Goa. He also said that Mormugao Port Trust (MPT) has registered a sterling performance clocking a remarkable 25 per cent growth during the just concluded financial year. In the process, MPT has also recorded the highest growth rate on a year on year basis, among all the 12 major <g data-gr-id="368">ports</g> in India. This is a commendable achievement, considering that the Port suffered massive downturn in the throughput following the ban on exports of iron ore from Goa. From a peak of 50.02 MMT handled during 2010-2011, the Port faced fall of fortunes in 2013-2014, when the total cargo throughput was reduced to 11.74 MMT.
Showing a great degree of resilience, the port has shown a resurgent growth by handling 14.71 million metric tons (MMT) cargo between April 2014 and March 2015, as against 11.74 MMT during the corresponding period in 2013-2014. Out of the total throughput of 14.71 MMT, exports accounted for 3.33 MMT (23 per cent) and Imports accounted for 11.38 MMT (77 per cent). Prior to the ban on iron ore mining, iron ore exports constituted a lion’s share (80 per cent) in the port’s cargo profile. MPT has since staged a remarkable turnaround from being a mono-commodity port to being a multi-commodity port by adding a wide range of cargo to its kitty. Today, coal, coke, fertilisers, wood chips, petroleum and other chemicals figure prominently in its cargo profile and constitute 90 per cent of total tonnage handled at the Port.
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