The Hindu Business Line : Multi-modal Transportation of Goods Act 1993

Indian corporates are increasingly switching to multi-modal transportation systems for cost-effective movement of both raw material and finished goods, often outsourcing logistics requirements to third party service providers. It is thus fitting that the Directorate-General of Shipping plans to amend the Multi-modal Transportation of Goods Act with the objective of streamlining such operations.

SWEEPING changes are in the offing in the Multi-modal Transportation of Goods Act 1993 in the light of the increased trend of Indian corporates to switch over to multi-modal transportation systems both for movement of their raw material as well as finished goods by outsourcing their logistics requirements to third party service providers.

The Directorate-General of Shipping (DGS) has proposed a string of amendments to the Act with the cardinal objective of streamlining such operations. It is in the process of seeking views from the industry, which would be incorporated before the final draft is pencilled.

First, the proposed amendment seeks to alter the title of the Act to remove the restriction of the Act to exports. In this context, it has been proposed that the new Act should provide for the regulation of multi-modal transportation of goods during exports and, in the case of imports, after the goods have landed in India.

An industry expert says: "The existing Act does not apply to imports — that is, to transport contracts entered into outside India, as that will be according to local laws. However, there are more difficulties in the import leg after the goods land in India.

"Many intermediaries thrive in the absence of legal responsibility or liability by fleecing consignees/importers by way of various kinds of charges, particularly documentation charges. These can be overcome if the Act covers imports also."

Another proposed amendment seeks to make it mandatory for a person, after being registered to carry on business of carriage of goods by sea or multi-modal transportation, to quote his registration number on every Bill of Lading or multi-modal transport document.

In the light of this, the definition of `Custodian' in the existing Act is proposed to be broadened to any Customs notified port/airport, land Customs station, inland container depot and container freight station or any other place notified by the Government.

It is also felt in certain sections that it was necessary that in addition to financial institutions, Custodians such as ports, ICDs and CFS also have a role to play in effective monitoring of the Act, especially as these are "good check-points where the goods and documents are handled."

Thus, the proposed amendment envisages that "every custodian who accepts goods for export on behalf of the carrier or MMT operator should obtain, at the point of acceptance, proof of registration to the effect that the operator/carrier is registered."

Industry experts are of the opinion that the mandatory application of MMTG Act provisions under the existing system has certain ambiguities. They feel the provision should be applicable whenever any operator undertakes multi-modal transportation, whether he chooses to enter into a contract or not.

Further, it has been proposed that the matter of registration should be "universally visible", as this will serve greatly the shippers, bankers and custodians who depend on the authenticity of a transport operator as recognised by law.

The DGS feels, as indicated by the proposed amendment to the Act, that any person who contravenes these provisions by carrying on business without registration should be punishable with fine that may extend up to the freight income. This provision has been proposed as, at present, the number of MMT operators registered with the DGS under the MMTC Act 1993 is miniscule compared to the total number of transporters, including freight forwarders, shipping agents and Customs agents.

In another new proposal, it has been suggested that every consignor, shipper or MMT operator who has containerised cargo of dangerous goods should ensure that they are inspected, packaged and containerised in accordance with guidelines in the IMDG code, which is a part of the SOLAS Convention.

The proposed amendments, which are at present being debated in industry circles, will doubtless go a long way in streamlining the operations of MMT operators, who have been growing in number as Indian companies are increasingly resorting to cost-effective measures, especially in logistics.