Arpita Mukherjee and Angana Parashar Sarma
As India strives to improve its rank in the World Bank’s Ease of Doing Business from 77 among 190 countries in 2018 to less than 50 in the coming years, fast track express cargo mobility will be critical to achieving this target. India’s “National Trade Facilitation Action Plan 2017-20” proposed to bring down the time to the same day for clearance of export cargo and two days for import cargo by air. The express delivery industry, which provides integrated door-to-door transport and quick delivery of time-sensitive shipments play a crucial role in not only meeting the target set by the “National Trade Facilitation Action Plan 2017-20” but also in improving the efficiency and global competitiveness of Indian businesses.
India has a fairly robust express delivery sector. According to a study by Deloitte, the industry is expected to grow at a compound annual growth rate of 17 percent between 2017 and 2022. In the financial year 2017, this sector employed around 1.6 million workers and contributed close to Rs 2,000 crores to customs duties. With the majority of users being small and medium-sized companies across sectors, such as pharmaceutical and agro-processing, who rely on this sector for transporting their samples and high-value consignments, the express industry will continue to play a key role in India’s international trade.
In the past decade, a number of measures have been taken to support the growth of the express industry and enhance its contribution to international trade. This includes implementation of electronic data interchange at leading international terminals in India. The express industry and their associations Express Industry Council of India (EICI) have worked closely with the Indian government to implement ECCS—the express cargo clearance system, which follows a paperless system. Express terminals for cargo clearances have been set up in cities such as Delhi, Mumbai, Chennai, Ahmadabad and Bangalore.
Despite these developments and investments in the development of infrastructure, a number of small and medium enterprises and their exporters and importers suddenly started facing a new trade barrier. The customs in a leading airport of India citing the Courier Imports and Exports (Electronic Data and Processing) Regulations, 2010, banned all perishable through the courier or fast track route in December 2018. This led to a sudden stop in clearances of blood samples for testing, access to key medicines, exports and imports of food samples for test marketing and display in exhibitions, to name a few. After significant representation by the industry and reviewing the adverse impact on human life, the customs in February 2019 allowed courier companies to transport blood samples subject to requisite clearances by other government departments.
Restrictions on perishable through the fast track route not only lead to huge business losses for the exporters, importers and the express industry, but it is also against India’s initiative to implement the World Trade Organization’s (WTO) Agreement on Trade Facilitation. India is a signatory to Article 7, Section 8 of that agreement on “Expedited Shipments” which calls for member states to “adopt or maintain procedures allowing for the expedited release of at least those goods entered through air cargo facilities”. Since other countries are promoting express delivery and fast track clearances for perishables, Indian business are at a disadvantage.
If one dwells deep into the root cause of the ban on perishable cargo clearance through the fast track route, laws governing the movement of goods through the air cargo route were initially governed by the Courier Exports and Imports (Clearance) Regulations, 1998. Back then, courier did not have a specific terminal and it was cleared in the passenger terminal. Over time, express companies and their association have built terminals, but the ban on the movement of perishables via the air cargo route continued. Subsequently, the Courier Imports and Exports (Electronic Data and Processing) Regulations, 2010, continued to ban perishables. In the light of the need for fast track movement of perishable cargo and for improving the ease of doing business, it is important to amend the 2010 regulation and remove the restriction on perishable cargo movement through the courier or express route subject to requisite clearances by the other clearance agencies, such as Drug Controller and the Food Safety and Standards Authority of India (FSSAI). In other words, there should not be any restriction on the mode by which the cargo is brought into the country or exported (by air or sea or through logistics or express delivery) as long as it goes through the proper testing and due diligence process
In the context of clearance of perishable through express mode, a survey conducted by the authors found that there is no clarity on the definition of perishable and it encompassed all goods which require testing and clearances by the requisite government bodies. Thus, perishable became all-encompassing from chocolates to biscuits to medicine and cosmetics. If a fast track mode is discriminated against for clearance of such a wide range of cargo needless to say that it will have an adverse impact on exporters.
It is important that all consignments through any route should adhere to due diligence such as product testing and getting product specific clearances from requisite authorities. The express industry is willing to go through the due diligence process as logistics providers. The benefit of express cargo is that it is fast track and offers an integrated service to the clients vis-a-vis logistics. As India is implementing trade facilitation and is trying to improve ease of doing business, it is important to amend the 2010 regulation and allow the entry of perishable cargo through the fast track route, subject to testing and other requirements as is applicable to logistics.
There is also a need to have a robust back-end IT infrastructure which will link customs with other clearance agencies. If this is done, India will not only improve its rank in the cross-country comparative indices but logistics costs of doing business will decline significantly. It will especially help our exports in key sectors, such as pharmaceutical and agriculture exports, which constitutes of a number of perishable items.Arpita Mukherjee and Angana Parashar Sarma are, respectively, Professor and Research Assistant at ICRIER. Views expressed are personal.