Singapore and India have launched the TradeTrust Framework, a joint initiative to enable interoperable electronic Bills of Lading (eBLs) backed Letter of Credit (LC) transactions between Singapore and Indian banks and companies. This project was carried out in close collaboration between government agencies (the Ministry of Trade and Industry, the NITI Aayog, Enterprise Singapore, and the Infocomm Media Development Authority) and industry partners (DBS, ICICI Bank, Maptrasco, Jindal Stainless, and A.P. Moller-Maersk).
The TradeTrust Framework is a significant milestone in the digitalisation of trade between Singapore and India, and will pave the way for more efficient, secure and transparent cross-border trade and boost economic growth for both the nations.
What is it? eBLs are digital versions of the traditional paper Bill of Lading. It is a document that serves as a receipt for goods that have been shipped, and it also serves as a contract between the shipper and the carrier. eBLs are used to replace paper Bills of Lading, and they offer several advantages.
First, it improves the efficiency since eBLs can be exchanged electronically, which eliminates the need for paper documents to be physically transported. This can save time and money, and it can also reduce the risk of errors. Second, enhanced security, because eBLs are stored in a secure database which makes them less vulnerable to fraud and tampering. Finally, it improves the transparency since all parties involved in a trade transaction can access the same information about the eBL, which improves transparency and reduces the risk of disputes.
The TradTrust Framework is based on distributed ledger technology, which allows for the secure and transparent recording of transactions. This makes it possible to track the progress of a trade transaction in real time, and to ensure that all parties involved have access to the same information. This will help to reduce fraud and errors and improve the speed and efficiency of trade transactions. Furthermore, the framework is also interoperable with other trade finance platforms, which will facilitate trade between Singapore and India.
The launch of the TradeTrust Framework is expected to boost trade between Singapore and India’s small and medium-sized enterprises (SMEs), which are key drivers of economic growth in both countries. In the past, trade between Singapore and India was often hampered by the lack of trust and transparency. This was due to the use of paper-based documents, which were often lost or misfiled.
The framework will help to address this challenge by providing a secure and transparent platform for trade transactions. Though digitalised trading is already being carried out by a number of banks and companies in Singapore and India, the present framework is expected to be further adopted by more businesses in the coming years, as it becomes the standard for trade finance in the region. By making trade transactions more efficient, secure and transparent, the framework will help to boost economic growth in both countries.
The proposed innovative framework is interoperable with other trade finance platforms. This means that it can be used to connect businesses in Singapore and India with businesses in other countries as well. Further, this measure is expected to be used by a wide range of businesses, including banks, SMEs and large corporations.
The launch of the TradeTrust Framework is a significant milestone in the digitalisation of trade between Singapore and India.
Saravanan is a professor of finance and accounting at IIM Tiruchirappalli, and Williams is an analyst at Sernova Financial