US law puts Indian ports under scanner5 min read . Updated: 31 Oct 2007, 11:57 PM IST
US law puts Indian ports under scanner
US law puts Indian ports under scanner
India will have to spend a few thousand crores of rupees to buy and install equipment that scans cargo containers bound for the US from its ports, to comply with a new US law that will come into force in 2012.
Without such investments and resulting changes, Indian ports risk being in the list of ports that are excluded from shipping containers to the US under the Law on Maritime Cargo Scanning Requirements that was enacted in August.
While it may seem several years away, shipping industry experts note that the changes will take substantial time given the logistical and other issues confronting Indian ports.
India shipped about 145,000 forty-foot equivalent units (FEUs) of cargo containers to the US in the nine months to September, from ports in Navi Mumbai, Chennai, Tuticorin, Kochi, Kandla, Mundra and Pipavav. But none of these containers was scanned at the ports before they were put on ships for transporting to destinations in the US. A twenty-foot equivalent unit (TEU) is the standard size of a container and is a common measure of capacity in the container business. An FEU is double the size of a TEU.
“Currently, we are scanning only import containers. Export containers are not touched at all," said P.K. Sinha, additional commissioner (imports), customs department, Mumbai.
The responsibility of scanning cargo containers passing through Indian ports is with the customs department and not with port authorities, terminal operators or shipping lines. “Export containers are not being scanned now because of fears that it may delay exports," Sinha added.
Though aware of the new legislation, it would be difficult to comply with the new law as “100% scanning of export containers bound for the US may not be possible. It requires huge investments in infrastructure, will add to the costs, delay exports and leads to congestion," said S.S. Hussain, chairman of Jawaharlal Nehru Port Trust (JNPT).
“It is their (US) legislation. At the cost of other countries, US wants to be safe. It is up to the US whether to accept or reject export containers sent from India," said an official at the Directorate General of Shipping, the country’s maritime regulator, who asked not to be named.
A JNPT official said the cost of a mobile scanning equipment is about Rs14-15 crore at current prices, while a fixed scanner costs around Rs40 crore.
About 15% of the 1.65 million export containers handled at JNPT in fiscal 2007 went to the US. “The balance 85% goes to other countries where there is no such scanning rule. Why should we give an exclusive service for only 15% of the export volumes handled at the port?" the port official asked.
Sinha said a shortage of scanning equipment and space constraints inside ports, particularly JNPT, has prevented the customs department from undertaking full-fledged scanning of cargo containers at ports. “We are currently scanning only 10% of import containers that lands at JN Port and these are chosen randomly by the electronic data interchange system," he said.
JNPT, India’s biggest container port handling some 60% of the country’s container cargo, has two scanners—one mobile scanner operating at the port and the other installed at a container freight station run by the state-owned Central Warehousing Corp. Ltd, some 4km from the port. These two have been installed, and are maintained and operated by the customs department.
“Given the huge volumes of container cargo passing through JNPT, these two scanners are not enough. We need a dedicated area for scanning containers with four-five scanners," said Om Prakash Agarwal, senior vice-president, Bombay Custom House Agents’ Association.
The mobile scanner installed inside JNPT can scan only about 10 containers per hour, Agarwal added.
Sinha said the Directorate of Logistics, functioning under the Central Board of Excise and Customs (CBEC), was in the process of buying scanning equipment to be installed at all the container ports in the country. CBEC is buying about 10 such scanners at an investment of Rs500-800 crore, said a Union shipping ministry official who did not wish to be named. This equipment is being purchased and installed for the safety and security of Indian ports and is not intended to comply with the US law, the official said.
However, Sinha said when more scanners are installed, the customs department would be able to screen export containers as well. “The additional equipment would take care of scanning export containers also. If we are asked to scan export containers, we will have to do it," said Sinha.
Meanwhile, JNPT, on its own, is in the process of floating a global tender for buying a state-of-the-art fixed scanner with a view to beef up security after the recent theft of four containers from the port and stray incidents of cargo theft from export containers. “The board of trustees of JN Port has cleared the proposal to buy the scanner, which will be installed inside the port and operated by the Central Industrial Security Force," Hussain said.
Agarwal said a failure to screen each and every container going from India to the US from 2012 would result in these containers being sent back. “In such a case, Indian exporters will lose, both on ocean freight and also on orders," he said.
The JNPT official said the US law can be implemented in totality in India, only if all the container freight stations are equipped with scanners.
“For this, a policy decision will have to be taken by the government, making it mandatory for all container freight stations to install scanning equipment to scan containers and charge it to the exporter. This will, however, add to the cost of exports," the JNPT official said.
“In such a case, the shipper (exporter) will have to pay the scanning costs," said Shanat Shetty, head (ocean freight service centre), India at Swiss freight-forwarder Panalpina.
India is in talks with the US to join the Container Security Initiative, which pre-selects, according to risk assessment criteria, containers destined for the US prior to loading on the ship in a foreign port, the shipping ministry official said.
The initiative, launched in 2002 by the US Bureau of Customs and Border Protection, initially focused on the top 20 ports shipping about two-thirds of the container volume to the US. But smaller ports are being added to the programme and participation is open to any port meeting certain volume, equipment, procedural and information-sharing requirements.