Not long ago, India’s largest container port at Nhava Sheva, off Mumbai, was awfully chaotic, ships routinely resorting to ‘congestion surcharge’ to offset losses incurred due to their longer stay at the terminal. Outside the port, named after Jawaharlal Nehru, massive serpentine queues of container trucks and trailers were routine, drivers staying inside the cabin for days on end, awaiting their turn. Over two dozen container freight stations (CFS) around the port ‘serve’ exporters and importers. Global shipping companies too have joined the party, by setting up CFS either on their own or in joint ventures. Freight forwarders and custom house agents ‘helped’ companies clear their cargo through the customs, with a ‘facilitation’ fee. For years, an unabashedly corrupt system milked the companies and made their re-exports expensive and unviable in the international market. Everyone loved the congestion while the companies bled.
In 2008, the Customs at JN Port decided to bring in transparency in the whole process steeped in opacity. They implemented ‘ease of doing business’ and promised huge cost and time benefit to companies trading through the port. Strangely, the schemes floated by the Customs did not attract many takers, then. The new chief customs commissioner John Joseph, who joined in August 2016, took it as a challenge.
What ensued was a full-blown war. There were serious efforts by the coterie to prevent the Customs from implementing their well-intended rules. The Customs defeated every move and even denied ships entry to the port. Shipping lines and CFS owners moved the Mumbai High Court separately, hoping to get an injunction. But they were snubbed by the court. The move to allow importers to choose their preferred CFS literally broke the age-old monopoly of shipping lines.
With a slew of circulars, public announcements and individual letters to CEOs of India Inc, the Customs trampled every opposition. Under the Direct Port Delivery (DPD) scheme, they helped the trade take delivery of import containers quickly (like green channels in airports), with a direct saving of up to Rs 15,000 per container. As the port handles over 5,000 containers a day, total savings run into hundreds of crores. Quick delivery of import cargoes, which were used in re-exports, brought in huge economic benefits. Companies such as Skoda, Volkswagen, Tata Motors, BASF, Mercedez, Asian Paints, Hewlett-Packard, Sony and LG figure among the top importers at JN Port. Most of them are now making a huge saving. As the cargo volumes move up, the Customs has collected Rs 54,000 crore in import duty, accounting for almost 25% of total duty collected by the Customs during last fiscal.
Like in all developed countries, the IT risk management system created by the Customs helps them identify potential fly-by-night operators. It is well supported by an array of scanners for physical scrutiny of containers.
For exports too, there is an effective system in place – Direct Port Entry (DPE). Time taken for clearing export containers has now shrunk to a couple of hours from the earlier 3-4 days.
No wonder, the trade is now shifting back to JN Port from the neighbouring ports of Hazira, Pipavav and Mundra, proving that establishments that provide ‘ease of doing business’ will be the ultimate beneficiary.
They surely deserve a standing ovation by the India Inc.
The writer is editor, DNA Money. He tweets at @AntoJoseph