“World trade is expected to fall by between 13% and 32% in 2020 as the Covid-19 pandemic disrupts normal economic activity and life around the world”, states the press release issued by the World Trade Organization. It cannot be denied that the impact of Covid-19 will be severe and long lasting – forcing countries to take exceptional measures which include stringent polices and regulations for sustaining trade.
Countries with more efficient and digitized trade facilitation policies and procedures in place are naturally less impacted by the pandemic, relative to the countries where trade immunity is very low. Globally, different measures have been adopted to mitigate the impact. For example, as a part of the ‘Belt and Road Initiative’, China allowed enterprises to choose clearance mode for goods transported by the CR Express either at ports of entry/exit or at local Customs. Electronic copy of documents required for verification was accepted by Customs upon approval before the submission of the paper document. As an alternative to on-site audits, Customs conducted off-site audits via video or electronic data transmission or are basing the audit on the inventory data provided by enterprises. Also in the absence of consignees during an inspection provided that they entrust operators of the inspection yard or the person in charge of the transport conveyance to be on site. Consignees can notify Customs of their absence through e-mail or online platforms. [1]
As India entered a nation-wide lockdown on 25 March 2020, an order with respect to trade was issued stating, “to stop all incoming passenger traffic on all 107 immigration check posts which includes all airports ICPs, all seaport ICPs, all land ports ICPs, all rail ports ICPs and all river ports ICPs in view of the spread of Covid-19.” The order also said, “Vehicles/trains carrying goods for trade or essential goods and supplies are exempted from this prohibition along with their crew, driver, helper, cleaner, etc. subject to their thorough screening by medical staff for Covid-19.”
After the announcement of next phase of the lockdown, the Ministry of Home Affairs issued guidelines on 15 April 2020 allowing operations of land ports for cross land border transportation of essential goods including petroleum products and LPG, food products, and medical supplies. The movement of staff and contractual labour for operations of land ports was also allowed subject to valid pass issued by the local authorities.
In the year 2019-2020, overall trade decreased for both exports and imports by 4.78% and 9.12% respectively. According to a report by the United Nations, “trade impact of the coronavirus epidemic for India is estimated to be about USD 348 million”. India’s total trade for the year 2018-19 was USD 1166 billion, of which total exports were USD 535 billion and imports USD 631 billion[2]. Of this, trade through land ICPs constitutes USD 8 billion. India’s trade is dominated by sea and air, and the impact of lockdown on trade will be different as trade procedures and challenges are diverse for sea, air and land.
Over the past few years India’s ranking has improved in Doing Business report published by World Bank. India is among the top 10 improvers as per the latest report. India overall ranking has improved from 77 in previous year to 63 as per World Bank group’s Doing Business 2020 report. As a part of ease of doing business initiative, trade facilitation and logistics are the areas wherein enormous development takes place with reformed policies and procedures, of which, digitization and reduction of manual touchpoints are two major components. Government took several initiatives under the umbrella of the National Trade Facilitation Action Plan 2017-2020 – to streamline trade, business processes as well as reduce time and cost of trade. These initiatives included implementation of post clearance audit, integration of stakeholder in a single electronic platform i.e., SWIFT, upgrading port infrastructure, and enhancing electronic submission of document through e-Sanchit however complete implementation of these are yet to be witnessed at ICPs.
At the time when the entire world is at a standstill, and seaports and airports are still functional, thought to a limited extent, for cargo movement, the land ICPs have come to a complete halt as most of the operations are manual and require human dealing. It was gathered from the ground that post the announcement of lockdown on 23 March 2020, ICP Petrapole was still open with limited staff of Central Warehousing Corporation (CWC), Land Port Authority of India (LPAI) and Customs. Yet trade operations are stuck, given the strict lockdown restricting custom brokers to visit the port for completing clearance process. On account of varying quarantine rules, the labour and truck drivers are also hesitant to go across the border. According to sources, “231 export trucks are stuck at ICP Petrapole and 36 Bangladeshi trucks that came to the Indian side for making the delivery are stuck at Indian side”.
“Export from India has been reduced to 40-50% and imports has been reduced to 10-15% at Raxaul” said an official stationed at ICP Raxaul. Major reason for the significant decline in exports is because of the drop in demand from Nepal side, reason being lockdown was implemented at the same time in India and Nepal.
Apartment from trade, Covid-19 has also impacted passenger movement. For example, the month of Ramadan is a peak time for Bangladeshi tourists to visit India for shopping.
In order to minimize the impact of Covid-19 outbreak and facilitate trade though ICPs, it is imperative to digitize EXIM procedures. The ongoing crisis offers an opportunity to mandate stakeholders to use digital platforms for all the customs clearance procedures with additional incentives. For example, currently for the cross-border movement of trucks, car pass/exit pass along with Let Export Order (LEO) is generated by Customs in hard copy and is given to truck driver. Also, at ICP Petrapole and ICP Raxaul, old LCS gate is operational for exports. At ICP Petrapole, exports cargo (except 36 commodities, including Chassis, Rice, Onion, Caustic Soda, etc.) are moved from sterile area to non-sterile area (Jessore road). At ICP Raxaul, interviews suggested that there is resistance from trade to transfer the operations to ICP. The complete migration of LCS customs formation to ICP can be completed now in coordination with Bangladesh/Nepal governments due to less number of truck movements.
More streamlined procedures and digitization of documents would lead to paperless/faceless transactions at the ICPs. Reduction in manual touch points will also facilitate safe working environment and faster clearance.
[1] https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2328
[2] https://pib.gov.in/newsite/PrintRelease.aspx?relid=189768
Drishti Bansal is Research Associate at Bureau of Research on Industry and Economic Fundamentals (BRIEF), views expressed are personal.