Official sources said the Indian government is considering a proposal wherein ports may have to pay a penalty to traders in case their cargo gets delayed due to congestion at the ports.

Reports added that the commerce ministry has already sent this proposal to the Shipping Ministry which is the nodal body for 12 major ports in the country. The Shipping Ministry is examining the issue.

This proposal was a part of several suggestions made by an inter ministerial task force led by the minister of state for commerce and industry Mr Jyotiraditya Scindia to suggest ways to reduce the transaction costs for traders.

Transaction costs include time and money spent by traders in complying with Government norms on foreign trade. Mr Scindia has already met the Shipping Minister Mr GK Vasan in this regard.

An official of the Federation of Indian Export Organizations the apex body of exporters explained that “Ports like JNPT and Chennai levy a congestion charge on shippers. The shippers in turn pass it on to the traders. In effect the traders are bearing the cost of congestion at ports.”

According to FIEO Transaction costs in India are as high as 8 to 10 % of the total trade value. This means that out of total trade of around USD 455 billion in the last fiscal transaction costs accounted for almost USD 45 billion. Indian exports become expensive due to high transaction costs hurting their competitiveness in international markets. Bringing the transaction costs down to around 3 % is expected to help India achieve global standards.

According to FIEO in ports in Denmark only 3% of the total shipments are examined by the authorities as the trust factor there is high. On the other hand in Indian ports over 10 % of the total shipments is examined, leading to inordinate delays.

Reports added that advanced countries have fully automated modernized ports and integrated tax regime which gives them an advantage. Besides some countries also have Inland Tax/Revenue Authorities that are far more efficient than India's Customs Department because they have a dynamic risk management system that in turn helps in expeditious clearance of consignments.

An industry sources said that “The clearance could take place as quickly as within 10 minutes of the consignment entering the port. Therefore there is no congestion at all.”

(Sourced from Business Line)