SMART WAY TO MANAGE KYC
EKYC enables customers to submit their KYC details just once to ODEX and share the same with multiple stakeholders. This provides a considerable saving in terms of cost and time for all the parties involved
The International North South Transport Corridor (INSTC), a multi-modal network of sea, rail, and road for moving freight and passenger between India, Central Asian countries, Russia and Europe was established in September 2000. It was a joint initiative of India, Iran and Russia, which came into effect in 2000 and was ratified in 2002. Azerbaijan joined the agreement in 2005. After almost 18 years what has been the progress? Can INSTC be a reality? What is there for India?
Federation of Freight Forwarders Association of India had recently organised a seminar on INSTC. It was attended by delegates from member states and from Government of India.
The INSTC has been described as India’s response to China’s Belt and Road Initiative. At present, it has 10 member countries apart from India, Iran, Russia and Azerbaijan. They are Belarus, Ukraine, Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, Turkey, Armenia, Syrian Arab Republic and Oman; Bulgaria is an observer member.
Shankar Shinde, Managing Director Global Express Multilogistics & ECM FFFAI said the corridor would be viable only if the costs and the time are competitive to the conventional route.
Principally there would be two routes. One would be from Bandar Abbas to Bandar Anzali on the Caspian Sea in Iran and the other from Bandar Abbas to Amirabad also on the Caspian Sea in Iran. With these two ports on the Caspian Sea exporters from India can reach out to multiple Central Asian countries and Russia and Azerbaijan, covering a total distance of 7200 kms.
There are very obvious advantages in moving freight along this route.
The transit time to the european countries would almost be half of the traditional route via the Suez channel. The transportation cost and the transit time is expected to be 30% and 40% less respectively. Few countries exist along the route which would make the border crossings bureaucratically less cumbersome.
Dr. Anup Wadhawan, Commerce Secretary, Government stated that the project to be efficiently operational, it would have to have the state of art infrastructure. It should be able to flawlessly accommodate multimodal operations across sea ports. It has to be cost effective. The procedures such as those relating to Customs, the documentation related to clearances, the approvals all have to be modernised or digitised and paperless such that the transaction costs are minimised and the obligations imposed on the users are minimised.
But there are other hard realities that need to be circumvented. The Azerbaijan Ambassador to India, Asharaf, unequivocally stated that the role of Iran in this project was central to the whole agreement. He hoped that the sanctions imposed by the US would only be temporary. The American stance on Iran have made private sector investors wary about the INSTC project.
The rail link between Asthara in Azerbaijan and Rasht in Iran is yet to be established.
On the technical side the different sizes in the railway gauges between the railways of the participating countries continues to pose a major problem. New railway lines need to be constructed to make the corridor viable.
Since currently there is no rail link between Asthara in Azerbaijan and Rasht in Iran, the shipping lines are reluctant to come forward to issue a through Bill of Lading upto the destinations. National carriers should be encouraged to carry freight on the sea route between India and Iran. NVOCCS would be more likely to come forward to handle the end to end logistics.
In 2014 when a dry run was made from JNPT to Russia via Bandar Abbas it was found that the cost was almost double of the existing route. Further many of the procedures relating to security, banking, Customs, single window clearance remained to be threshed out.
Once fully functional, INSTC will substantially reduce time taken and cost for transport of goods between India and Europe and the Central Asian countries. There would be a significant increase in economic activities between India and Russia and other countries in the neighbourhood. In the next five years, the Russian railways intend to increase the container volumes to 1.6 million containers per year. Of which a significant amount would be through the INSTC.
There is still a long way to go. Digitisation, paperless transactions, tracking cargo on line of the cargo is now the norm. The users would expect all these facilities to be up and running. These are achievable because many of the participating countries are signatories to the Trade Facilitation Agreement (TFA). There are however still miles to go for
INSTC to be operational.