A blockchain master plan is vital for India’s logistics transformation
Blockchain can give vital insights to streamline the domestic movement of EXIM cargo with the use of a smart contract enabling greater trust and transparency. A smart contract can be tailored to encode EXIM-related requirements including those of arrival and departure manifests to activate in advance the domestic players.
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A robust logistics network is one of the core building blocks for a healthy economy. Therefore, improving logistics competitiveness is vital for an Aatmanirbhar Bharat or self-reliant India. As digital and sustainable trade facilitation measures are showing results, it is time to explore the role of blockchain technology in guiding the integration of transport and logistics operations at the national level. Initiatives such as a blockchain of 15 banks for trade finance and exploring the technology for remote- and e-voting in the country etc. are encouraging examples.
India has been advancing digital solutions for logistics efficiency. Thus, companies are deploying blockchain ledgers for tracking product journeys and that allows real-time visibility for verified supply chain partners. As a result, in 2021, the country has scored 90.32% in the biennial Global Survey on Digital and Sustainable Trade Facilitation as compared to 78.49% in 2019. Conducted by the United Nations Economic and Social Commission for Asia and the Pacific, the survey indicates that India has outpaced developed countries including France, the UK, Canada, Norway, Finland etc. in terms of overall score, among other remarkable achievements.
Road freight as a base
Road is a preferred mode of freight transportation in India with more than 60% stake, while other transport modes too rely on roads for last-mile delivery. A significant portion of that is for export-import (EXIM) movements, mostly in a non-containerized format. EXIM freight may cover multiple domestic nodes on a case-to-case basis, but largely includes factories, warehouses, dry ports, container freight stations, land-ports, sea-ports etc.
Also, there are various digital innovations in the road sector – some are leading to digital synchronization of compliance and enforcement functions. For example, a recent measure in respect of road freight enforcement function through an app-based approach is a result of robust digital implementation of goods and services tax (GST), and in view of efforts for making vehicles’ (truck) data interoperable across states. Linking the necessary information into an RFID tag through the national vehicles database (VAHAN) and GST e-way bill declaration forms its genesis.
Likewise, ICEGATE integration with GSTIN – a tax identification number under GST, and digital initiatives e.g. e-SANCHIT for electronic processing of EXIM documents serve as a foundation for road-freight to be the use case.
Minimise silos, maximise interoperability
A public-private exploratory blockchain initiative could thus facilitate inputs from ministries viz. Road, Rail, Aviation, Shipping, Home (land port), Customs, Commerce (logistics, DGFT), and Finance (GST). The suitability of a low-cost smart contract and internet of things (IoT) solutions could be examined too.
Blockchain can give vital insights to streamline the domestic movement of EXIM cargo with the use of a smart contract enabling greater trust and transparency. A smart contract may require a legal basis for cross-border trade but its use in the domestic context may not bear such an obligation inflexibly. It can be tailored to encode EXIM-related requirements including those of arrival and departure manifests to activate in-advance the domestic players.
With the use of oracles, a smart contract may enable auto-payment as soon as an in-bound or out-bound logistics activity is verifiably concluded. This can also enable digital platforms to talk to each other while stakeholders collaborate in real-time through their smartphones.
The public-private initiative could represent single-window agencies, tax, and transport authorities, banks, academia, key logistics and technology stakeholders. A pilot could be designed for Delhi-Mumbai Industrial Corridor or East Coast Economic Corridor, with an option to increase intermodal routes. With that, initial gains can be reported for incentivizing a greater embrace of containerized, roll-on/roll-off movements of EXIM cargo within the country. Also, this could harmonize the regulatory framework, standardize technical, and simplify procedural aspects of intermodal transactions.
It should, with agility, foster regulatory innovations that help stakeholders coordinate in a completely paperless, preferably contactless, cost and time-efficient manner. The inputs will also be vital for integrated governing principles – the intermodal body, the inclusion/ exclusion criteria, provisions for risk assessment, dispute settlement mechanism etc.
Growing infrastructure investments will in-fact bear positive results in terms of improving India’s logistics landscape. Equally important is to facilitate interoperable regulatory and digital protocols across states, as well as modes and nodes of the transport and logistics sector. With the operationally integrated eco-system – that could be transformational.
A blockchain –based master plan is therefore vital for enabling and improving visibility, velocity and veracity of integrated supply chains for an Aatmanirbhar Bharat.
Deepankar Sinha is Professor, Indian Institute of Foreign Trade, Kolkata Campus.
Prashant Sharma is a Jaipur-based global economic and strategic affairs analyst. Views are personal.