The Hindu Business Line : TIR Carnet system — For a better load drive across Asia

India has land-based trade with five neighbouring countries — Bangladesh, Pakistan, Bhutan, Nepal and China (recently through the Nathu La Pass in Sikkim). The most significant is with Bangladesh as this trade has little political baggage and runs mainly on economic criteria. The trade is carried out through the Petrapole border post on the Indian side and Benapole on the Bangladeshi side.

Trucks carrying goods from various places in India reach Petrapole. Trade documents are pre-processed by the Customs station. After physical examination of the goods, the trucks roll across the border, where they are again physically inspected and their documentsverified by the Bangladesh Customs. Only then are they allowed to offload cargo at the Customs warehouse and turn back. Bangladeshi vehicles then transport the goods to various inland destinations in that country. The system is far from efficient, for several reasons:

It involves to multiple handlings of cargo.

Inordinate delays at the border as the Customs stations are not well equipped.

The limited processing capacity leads to a permanent queuing of vehicles. As a temporary measure there is a huge plan to invest in infrastructure at the borders. Given the international cross-border systems that work well in Europe, Central Asia, and West Asia, modernising the Customs checkpoints appears a waste of resources. As there are Customs stations at originating and terminating cities in India and Bangaldesh, a system modelled on the cross-Europe trade would allow trucks to whizz past the border without delay.

India, Myanmar trade

Some amount of trade also takes place between India and Myanmar, but mostly informal. Moreh in Manipur (on the Indian side) is the point of crossing into Myanmar. However, there is no regular truck-based trade and most of the goods passing through this point are actually brought here by way of transportation by ship via Singapore at an enormous cost as well as inordinately long lead times.

Till recently, (during the Cold War) many European countries were at loggerheads politically and separated commercially. Yet, many of them engaged in road-based trade among themselves. The political differences rarely impeded the free flow of goods. The movement of cargo-carrying trucks from the EU to the non-EU parts (such as Turkey or Russia) and further to Central Asia and West Asia has always been smooth and easy.

TIR Convention

The problems of border crossing therefore are being overcome through the adoption of the UN Road Transport Protocol called TIR (Transports Internationaux Routiers) convention. The TIR system allows truck-based trade all the way from Western Europe to the outer edges of the former Soviet Union. Started by less than half a dozen countries in the 1950s, the system now covers more than 80 nations. Itis managed by the Geneva-based UN affiliate agency, the International Road Transport Union (IRU). IRU member-nations can employ the TIR convention for seamless road-based trade and travel across national boundaries.

Guarantee chain

This system operates by issue of a document TIR Carnet, which is in effect a guarantee that all are IRU members and TIR convention signatories. With the TIR Carnet, for a truck carrying international goods, the Customs authorities of origin, transiting, and destination are guaranteed that all applicable dues and penalties will be paid to the Customs of the country where the claim occurs.

This, in effect, eliminates border checks and clearance of goods. There is rapid screening of TIR Carnet document and the TIR Seal at border crossings, and there is no need for detailed document or physical inspection. Detailed customs declarations and inspections can be done at inland Customs stations in the originating and destination countries.

Case in point

On simulating the movement of a truck load from a factory near Delhi to a factory near Dhaka under the TIR Carnet system, direct savings were as much as Rs 15,000 per truck. The savings include elimination of three days of waiting, reduction in Customs transaction charges, man-hours, avoidance of double handling as well as damage to cargo. As hundreds of trucks move everyday both ways, the overall economic impact of these savings could translate into millions of dollars per year and eliminate most cross-border hassles for the businesses of the TIR-linked nations.

The biggest savings will come from the reduction in pipeline inventory and leaner supply chains.

Ratification of UN conventions

To implement this system would require ratification of few more of the UN Conventions by India and the neighbouring countries through legislative action and also forming an apex Road Transport Association in India that could become the affiliate body of the IRU. Similar changes need to take place in neighbouring SAARC and Asean nations. Interestingly, Pakistan and China are on the way to ratifying the TIR convention and will start trading vide the TIR system from 2007.

(Nikhilesh Dholakia is a Professor of Marketing, University of Rhode Island, US, and S. L. Ganapathi is Managing Director, Logistics Plus India Pvt Ltd.)

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