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Volume 1 Issue 8 | Quarterly News April 2017 | www.amtoi.org AMTOI
Volume 1 Issue 8 | Quarterly News April 2017 | www.amtoi.org
AMTOI
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ASSOCIATION OFMULTIMODAL TRANSPORTOPERATORS OF INDIA
Goods and Service Tax: An European Perspective
Contents
AMTOI Salutes Bravehearts of Maharashtra
Interview : Deepak Shetty, Former DG, Shipping
12th Maritime Power Conference
Training to Excel
Editorial
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06
08
10
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14
16
From the President's Desk
Antwerp and Active Landlord Port Authority
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Editor Shantanu Bhadkamkar / Xerxes P Master
Special CreditXerxes P Master
Publisher Sailesh Bhatia
Registered OfficeC/o. CKB, 1st Floor, 20 Rajabhadur Mansion,Ambalal Doshi Marg, Fort, Mumbai - 400 023T: +91 22 6637 0021 Telefax: +91 22 6637 0022E: [email protected]: www.amtoi.org
Computer Artworks Sanjay Punjabi
Printed and Published by B N Prints on behalf of AMTOI (Association of Multimodal Transport Operations of India)
All rights reserved in all countriesNo part of this publication may be reproduced, stored in a retrieval system or transmitted by any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of publishers. No liabilities can be accepted for inaccuracies of any content (Description), also opinions reflected in the publication are those of the writers. The publisher does not take responsibility for returning of unsolicited publication material or material list or damaged in transit or photographs. Views expressed in this (newsletter) do not necessarily represent those of the publisher. All correspondence should be addressed to AMTOI. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai city only.
Protecting Against Corruption Risks
AMTOI Celebrates Annual Day with a Purpose! 20
AMTOI NEWS : Volume 8 | Issue 14
Mr. Ravindra J. Gandhi, Managing Committee Member
Mr. Vivek Kele, President
Mr. S. Varadarajan, Managing Committee Member
Mr. Sailesh Bhatia, Immediate Past President
Mr. R K Rubin, Vice President
Mr. Xerxes Master, Hon. Secretary
Mr. Shashi Tanna, Advisor
Mr. Nailesh Gandhi, Hon. Treasurer
Mr. Shantanu Bhadkamkar, Managing Committee Member
Mr. Tushar Jani, Advisor
Managing Committee Members 2016-2017
Extended Board Members 2016-2017• The Air Cargo Agents Association of India
• The Container Shipping Lines Association
• Indian National Shipowners' Association
• Federation of Freight Forwarders' Association
• Federation of Ship Agents Association of India
• Coastal Container Transporters Association
• Consolidators Association of India
• CFS Association of India
• Indian Private Port & Terminals Association
• Association of Container Train Operators
• Women's International Shipping & Trading
Association
• All India Motor Transport Congress
Mr. Anand Arvind Sheth, Advisor
Mr. George Abrao, Special Invitee, Managing Committee Member
Mr. Pramod Kumar Srivastava, Convenor, Eastern Regional Chapter
Mr. Uday Bhaskar Reddy, Convenor, Southern Regional Chapter
Mr. Yogesh Parekh, Special Invitee, Managing Committee Member
Mr. T Venkataraman, Convenor, Western Regional Chapter
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Dear Members,
The transport and logistics sectors are the key to the growth / development of the country. In India, the economic growth has increased the demand for various modes of transportation to increase the efficiency and speed of goods’ movement. Multimodal logistics infrastructure has assumed immense importance.
While India continues to progress, a robust thrust is being given to transport and logistics, and development of infrastructure and waterways. GST is a path-breaking tax reform which is expected to be implemented from July 1, 2017. Since there will be many intricacies in GST compliance, AMTOI has decided to organise multiple GST seminars across India jointly with ACAAI, CAI and FFFAI to educate the industry, how to comply with GST rules.
Logistics is the backbone of the economy providing efficient, cost-effective flow of goods on which the other commercial sectors depend. The logistics Industry is evolving rapidly and it is the interplay of infrastructure, technology and new type of service providers that define whether the Industry is able to help its customers reduce their logistics cost and provide better services.
AMTOI celebrated its most prestigious event “AMTOI Day” on Feb 3, 2017, at Hotel ITC Grand Maratha with a purpose this time. The theme was “Expressing Gratitude to the Armed Forces”. A short video clip depicting the life of Indian soldiers at the frontiers was shown to the guests who expressed their gratitude to the forces for their sacrifices and dedication to the nation.
The chief guest at the event was (Retd.) Admiral R K Dhowan, Chief of Indian Naval Forces, who narrated his experiences of sea life and the role played by Indian Navy by providing protection to the fishing community.
The event saw the presence of the who’s who of the maritime industry, government officials and foreign dignitaries; including Dr. Malini Shankar, DGS, Mr. Amitabh Kumar, Jt. DGS, Mr. Atul Kulkarni, Advisor-IPA, Peter Huyghebaert, Consul General of Belgium, Mr. Mark Ven Peel, President, Port of Antwerp, Mrs. Anuradha Gore, mother of martyr Capt. Vinayak Gore, and other dignitaries.
Mrs. Gore spoke about the sacrifices of our jawans and their lack of recognition. Mrs. Gore is associated with Queen Mary Technical Institute (QMTI) which rehabilitates disabled soldiers. AMTOI, along with some of the guests, donated cheques to QMTI.
Taking this initiative forward, I am pleased to inform you that it was decided by AMTOI’s managing committee to
extend financial help to the widows of three martyred soldiers in Maharashtra. A sum of Rs 51,000 each was given by charitable trusts of three MC members, which was handed over to the families of the brave-hearts by AMTOI representatives at their native places in Amravati, Nanded and Satara.
I have been informing you all about the progress of Federation of Indian Logistics Association (FILA) ) in the earlier publications, we are in the process of registering the body as a section 8 company. All credit must go to the nine constituents of FILA, viz. AMTOI, ACAAI, CAI, CSLA, CFSAI, FFFAI, IPPTA, INSA and MANSA whose resolute stand made it possible for this common platform to take shape.
I am pleased to inform you that the Ministry of Shipping, Ministry of Skill development & Entrepreneurship and other government agencies have already started engaging FILA in discussions for taking forward the operation of skill development training, cargo community system and digitisation.
Last, I would like to inform you that the interior work of AMTOI’s new office at Bandra Kurla Annex, Kurla (W) will commence shortly, and hopefully, the next AMTOI news publication will be rolled out from there.
Best regards
Vivek KelePresidentAMTOI
From the President’s desk
AMTOI NEWS : Volume 8 | Issue 16
EDITORIAL
India’s new maritime jewel - Jaigarh Port - received the large dry bulk cargo ship, MV China Enterprise, carrying over 2,00,000 MT of coking coal from Australia on March 25, 2017. This is a significant milestone in India’s maritime history. Providing a boost to last-mile connectivity, a 42-km road between Jaigarh Port and Nivali was also inaugurated on the occasion. Besides, a foundation stone for the Jaigarh-Digni railway line was laid.
All this ties in with the government’s theme of developing maritime infrastructure, connected via an integrated system of roads, railways, airports and water ports (inland waterways). So far, the action on the ground reflect the policy direction and the intention to spend Rs 4.5 lakh crore on roads and Rs 3.6 lakh crore on port and shipping-related infrastructure.
Notably, the government has expressed its determination to improve India’s ranking on the World Bank’s index on ease of doing business. From a low (already improved rank of 142) to a rank of 130 in 2016, the Prime Minister has set a target of being among the top 50. All government departments have been mandated to improve service delivery mechanisms as well as public perception on this count. An apex coordinating agency –Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce – has started an outreach programme. DIPP has begun an assessment of states on their implementation of business reforms and has demonstrated a transparency by publishing the state-wise score cards online. This is a massive national exercise and a determined drive for overall improvement of the business environment through the government’s service delivery mechanism. The trade and industry need to take full benefit of this initiative and honestly engage with the government in a constructive manner for bringing about a change for the better.
SOLAS and VGM have triggered a lot of discussion among various stakeholders in international
trade. The change (while it rightly addresses the issue of safety at sea) it brings about for the benefit of performing carriers, is huge. It shifts
the responsibility and liability of accuracy of weight for safety at sea to the merchants and transport intermediaries unilaterally. On the other hand, it is not as explicit about many issues such as the performing carriers’ responsibility of
checking weight and many practical aspects with respect to ground realities.
The global shipping and international freight forwarding communities showed serious concern on the Indian government’s move to impose service tax on ocean import freight. Again, when to remove the dichotomy of ‘freight collect’ being subjected to service tax, and the prepaid freight not being subject to the same regime,service tax was made applicable even on prepaid ocean freight. As a side issue, the tax being ad-valorem, it has also created a challenge for ensuring the confidentiality of contracts. Regrettably (but not unexpectedly), Indian exporters and importers, in
What do you see when you look to the future?
“Leaders win through logistics. Vision, sure. Strategy, yes. But when you go to war, you need to have both
toilet paper and bullets at the right place at the right time. In other words,
you must win through superior logistics.”
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general, are yet to take serious note of, let alone take concrete steps to mitigate any of the issues mentioned above.
Given the context of the government’s determination to improve ease of doing business, imposing service tax on ocean freight seems counterproductive. It creates a barrier in international trade, particularly, as India is the only country to levy such a tax on freight. In today’s competitive environment,it is not only individual business enterprises that compete with each other,it is the entire supply chains that compete. Nations compete to make their country competitive and the states of a nation also compete with each other; so do townships within the state. This has proved both healthy and essential for nations to have economic success, as we live in a world of market economy, where most goods and services are driven by a buyers’ market. Capital flows where it is best protected, and has the best returns on investments; a more important consideration is that even the creation of jobs depend on the business environment being healthy and conducive for growth. Among the top considerations are all things that improve the ease of doing business. This index, therefore, has extraordinary importance.
Many countries have achieved excellence in ease of doing business. They also have outstanding infrastructure. Yet the competition at the top is intense and growth today is at a premium. Some, among these countries, have started investing in big outreach programmes, which includes governments and state institutions of these countries reaching out to prospective investors and customers. One such country which has taken a big initiative in India is Belgium. To stand out from the competition, the port has created a network with all stakeholders within Belgium. They have consistently given significant importance to India. The port has hugely invested in networking and relationships. The Port Authority offers training programmes to Indian freight forwarders with a particular focus on training women and youth in this industry. This has been well received and we
can say that AMTOI has been at the forefront in supporting this activity. This is a great example of outreach by a public authority for building bridges with future generations. It takes big, statesman-like visionary leadership to invest in long-term measures such as this.
To their credit, the top leadership of the Port of Antwerp Authority, Chairman, Marc Van Peel, CEO, Eddy Bruyninckx, Commercial Director Luc Arnouts and India representative Raj Khalid, with the India-Natie collaboration, have given a concrete shape to the relationship with AMTOI. This relationship also owes much to the enhanced engagement and interactions of former President of AMTOI Tushar Jani. Eddy Bruyninckx, CEO
retired, on December 31, 2016 at the pinnacle of a successful career. The Port of Antwerp posted extraordinary results in the last few
years,even in the background of global slowdown. Mr. Bruyninckx has been given a rare honour as he has been raised to nobility by his Majesty, the King of Belgium, who bestowed upon him the title of Baron.
The last few years have not been the best for airlines, shipping and transport intermediaries. Nonetheless, the Indian economy is still among the best for new opportunities. While it has done better than most world economies consistently for the past few years, the manufacturing sector and exports need impetus and greater attention. After a gap of about 300 years, we again live in an era where India is destined to be (one of) the engines of growth; hence, we cannot be looking outside India for impetus. Along with being the engine of growth, thought leadership also needs to come from within.
Warm regardsShantanu Bhadkamkar
“When we look into the future, we see disruption, we see collisions, we
see transformation, but most of all we see opportunities.”
EDITORIAL
AMTOI NEWS : Volume 8 | Issue 18
The Ministry of Finance has recently notified further amendments to its Service Tax Rules 1994 – referring to amendments initially announced with notification No. 30/2012 – Service Tax.
These amendments came into force on January 22, only 10 days after publication, with too little time for the trade to react. The service tax under this rule is an indirect tax levied on services as specified by the Finance Act. The current amount of the service tax is 4.5%. Import freight charges have been subject to service tax for all collect shipments since June 2016, with freight prepaid shipments being exempted.
Now, the exemption for freight prepaid shipments is withdrawn, making them also subject to service tax. While the rule says the provider of the service is responsible for paying service tax, it also allows the recipient of the service to pay for the tax. Most shipping lines have announced they will start charging the tax on freight to India at origin from the shipper, for freight prepaid shipments. For example, Hamburg Süd emailed their European customers as follows:
In its notification 01/2017- Service Tax, issued on January 12, 2017, the Government of India has announced the withdrawal of the exemption of prepaid import ocean freight from service tax with effect from January 22, 2017. To comply with this notification, Hamburg Süd has to invoice the service tax of 4.5% on all prepaid import ocean freight and ancillary ocean charges. Service tax will be payable by the same party paying the ocean freight. However, in view of the very short notice and/or existing commercial agreements it may not be possible to always collect service tax at the place of payment of ocean freight. In such cases, service tax will be collected from consignees in India prior to release of cargo.
MSC Antwerp/Belgium also said in an e-mail: On behalf of Mediterranean Shipping Company Geneva, MSC Belgium wishes to inform you that with immediate effect on all import shipments with freight terms collect, prepaid or elsewhere, the government has levied a 4.5% tax. On January 12, the Indian government has modified the services under tax exemption list and the territory of its applicability; making the marine freight charges taxable not only on taxable Indian territory (collect), but also in non-taxable Indian territory (read prepaid or payable elsewhere). This new modification to the tax exemption takes effect on January 22.
1. A tax equal to 4.5% of the cumulative O/F charges will be levied by the Indian Government regardless if the freight is payable collect, prepaid or elsewhere.
2. The tax will be levied on the lump sum of the O/F charges excluding any origin (FOB or non-Indian) charges such as origin THC, ISPS, pre-carriages, etc.
3. The lump sum of the O/F charges includes the sum of O/F, CAF, BUC, ECA, HAZ, PRS, CSF, OVW, EIS and CGS (when applicable) and any other freight related charges.
4. The lump sum does not include the Indian THC and Indian Inland charges which are already taxed
Indian Service Tax on Prepaid Freight - An European Forwarder's Perspective
FEATURE
Marc Huybrechts, President, C.E.B. (Belgian Freight Forwarders Association), on tax issues.
Mr. Marc Huybrechts
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The service tax is imposed by the Indian government and should be collected from persons that are part of the Indian tax regime. It is unreasonable to use foreign entities that are not part of the tax system to collect taxes at a place that is not part of the tax regime territory. There is legitimate question on the fact whether such a procedure is compatible with international accounting standards and practices.
4. Service tax must be collected from the consignee Having concluded the above and due to the fact that
the rule allows for the consignee to pay for the taxes, FIATA Working Group Sea believes it is unreasonable to collect a tax from a foreign person who is not part of the Indian tax regime. Instead, it is recommended the service tax be collected at destination and from the consignee who is party to the Indian tax regime and could offset the same as per local regulations available to him/her.
Therefore, FIATA recommends its members to lobby their government and relevant authorities along the above-mentioned lines and refuse to pay the service tax to shipping lines. In fact, there are shipping lines that have already agreed to collect the service freight on prepaid shipment to India at destination. Rather than simply trying to collect the taxes from the shipper, shipping lines should communicate with the Indian Government in order to seek clarification.
The Indian government promised ease of doing business. The amendments on prepaid shipments into India are clearly against it. All this has caused a situation where lot of valuable time, efforts and energy has been spent on confusion, discussions and frustrations which could have been avoided by consulting with the international, professional associations of the freight forwarding and logistics service providers in advance.
through the 15% IHC (Indian Statuary Service Tax). This tax is not included in any new or already given quote (regardless validity) but is always applicable as here above mentioned. The tax needs to be charged, imposed by the Indian government, with immediate effect on any cargo sailing as of Sunday, January 22, 2017.
As the guidelines were unclear, and interpreted differently by parties concerned, freight forwarders in Europe raised comments saying they were not the tax collector for the Indian government and that they did not want to be treated as banks.
The secretariat of the Antwerp and Belgian Freight Forwarders Association, together with Antwerp-based freight forwarder Jens Roemer (Chairman, FIATA’s working Group Sea), studied this matter at length and reached following conclusions, which were released on February 3:
1. Lead-time The mentioned amendments have been announced
on January 12 and came into force on January 22, 2017. This short notice is unreasonable as it does not allow the trade to prepare or comment.
2. The logic of indirect tax Service tax is supposed to be collected by the
service provider who is recovering the amount from the service recipient. In the context of international freight, both the shipper as well as the consignee can be considered as recipient of the services. However, a taxable person who is part of the tax regime, pays service tax and can use it as tax credit in the form of CENVAT credit. The trader who is established in the territory can recover the taxes paid. This is not possible for a person outside of the tax regime.
3. Legal Jurisdiction
FEATURE
AMTOI NEWS : Volume 8 | Issue 110
Estimates show the cost of corruption equals more than 5% of global GDP, with more than $1 trillion paid in bribes yearly. The logistics sector is particularly exposed to such risks; the risks being higher when dealing with overseas customs officials.
The biggest risks are in ocean shipping and road haulage. Demands for bribes by government officials is a
common risk. Such demands could come from customs, immigration, state agencies and environment service officials.
A freight forwarder is most likely to be exposed to the risk of corruption when there is a combination of factors including non-transparent procedures, little independent oversight and no realistic means of appealing a decision by a government official.
There have been many incidents that have exposed the risk of freight forwarders caught up in corrupt practices, leading to reputational damage and substantial fines.
What can be done to minimise this?A risk assessment should be conducted, including research into markets and business partners. Simple internet searches can help identify levels of corruption or bribery and business representative bodies can also provide valuable local knowledge.
Companies should have an anti-bribery policy if there is a risk that someone who works for them or on their behalf
Protecting Against Corruption Risks
might be exposed to bribery. The policy should include:
• The company’s approach to reducing and controlling the risks of bribery
• Rules about accepting gifts, hospitality or donations• Guidance on how to conduct the business• Rules on avoiding or stopping conflicts of interest
Companies can reduce their exposure to bribery by ensuring their staff and local suppliers are trained and understand the company’s anti-bribery policy. In larger organisations, it is important to ensure that those in charge of the day-to-day business are fully aware and committed to preventing corruption.
An organisation could be prosecuted if someone who performs services for it pays a bribe to gain a business advantage. However, prosecution can be avoided if the organisation can demonstrate they had adequate procedures in place to prevent bribery and that the policy is monitored and reviewed regularly.
The WTO’s Trade Facilitation Agreement (TFA) can also contribute to the fight against corruption. It sets forth measures for expeditiously moving goods across borders, inspired by best practices worldwide.
The TFA is designed to reduce uncertainty around customs requirements, including fees and payment options that have to be published or made available online. It also contains clear procedures regarding the handling of complicated situations and aims to streamline the flow of trade across borders, making business more transparent and predictable.
FOCUS
Robert Keen, DG, British International Freight Association (BIFA), on how freight forwarders can protect themselves.
Mr. Robert Keen, DG, BIFA
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AMTOI has been successfully conducting skill development training courses in Mumbai in collaboration with Maersk Training, Chennai since the last year. These programmes now have become synonymous with AMTOI’s continued endeavour to impart knowledge to the shipping fraternity.
Since the beginning of 2017, AMTOI has conducted training programmes which have been hugely successful and well-attended by the participants from the shipping Industry. The topics covered till date are:
1. Entrepreneurship: January 23, 20172. Interpersonal skills at the work place: January 24,
2017
Association of Multi Modal Transport Operators of India (AMTOI) collaborated with Cochin Steamer Agents Association (CSAA) and successfully organised a day-long training programme at Cochin on March 25, 2017 at CSAA’s office premises. Mr. Abe Joseph, branch manager, Shreyas Relay Systems Ltd, in his inaugural speech, spoke about AMTOI and its vision. He emphasized on their skill development initiative which has resulted in training programmes conducted at Mumbai, Chennai and Gandhidham, Gujarat, covering various shipping and logistics-related topics. AMTOI is planning to extend these training programmes to other parts of the country as well.
The programme was conducted in association with Maersk Training, Chennai, which was well-attended by participants from various shipping companies, freight forwarders and customs representatives of Cochin.
The faculty was Ms. Arpita Mukherjee from Maersk Training, Chennai, a seasoned trainer with 15 years of experience in the field. She holds a post graduate degree in human resource management and topped the country while at the Indian society of Training and Development
Training to Excel Programmes at Cochin and Mumbai are the latest to have taken place in a long series of training programmes that began about a year ago.
In Mumbai
(ISTD). She is specialised in training with respect to organisational culture and behaviour.
The topic covered under the programme was – Effective talent management and measurement. The aim of the programme was to highlight the traits and qualities in leadership. Lessons imparted related to the purposes and responsibilities of a leader, and their role in managing and measuring their own as well as their team’s work. Ms. Mukherjee emphasized it is incumbent on a leader to get well-acquainted with their company's performance management processes and procedures. Unfortunately, she said, too many leaders fail to master the skills associated with managing and measuring the work of others. She concluded by saying that successful leaders who lead from the front, understand how important it is to a team's overall performance.
CSAA is planning to hold many more training programmes in collaboration with AMTOI in the coming months and the shipping fraternity is advised to take the advantage of these professional programmes.
3. Insurance and claims: February 27, 20174. Hazmat awareness: February 28, 20175. Container shipping for finance personnel : April 6, 20176. Bills of Lading and their types: April 7, 2017
Two of the seasoned faculties, Ms. Varsha Purnesh and Capt. Satya Narayan from Maersk Training Chennai, spoke to the participants, delving deep into their experience and expertise, greatly benefiting those that participated in this particular programme.
In Cochin
EVENT REPORT
AMTOI NEWS : Volume 8 | Issue 112
Antwerp and Active Landlord Port Authority
FEATURE
There are three main models of port management. The landlord port model is common across Europe where the port authority manages the port and builds the infrastructure. All cargo handling operations are given to the private sector. The Port of Antwerp is a landlord port and all cargo handling operations in the port are carried out by private companies.
Land within the port area is leased out by the port authority to private companies who then build the superstructure like warehousing, etc. The port ensures that sufficient competition is set up to ensure a continuous attempt to meet customer expectations and satisfaction. With a strategic deep inland location on the River Scheldt, Antwerp Port has a huge advantage over other north European seaports in that cargo unloaded here is closer to the customer or the final destination.
This results in lower transportation costs and time savings. With a multimodal offer of barge, rail, pipelines and road transport, Antwerp Port offers a variety of options to meet every need and cost. There is the option of short sea shipping (referred as coastal shipping in India). In 2016, Antwerp Port handled about 215 million tonne of cargo, making it the second largest port in Europe.
`The very nature of the port has now moved from a landlord port to that of an ACTIVE landlord port model. The figure below shows the changing role of port authorities over time.
Essentially this means a focus on two basic approaches:
1. Developing a strategy based on the improvement of the supply chain (“from outside in” - no longer “port centered”) and collaboration between the port operators and port users
2. A strategy based on sustainable development
Antwerp Port seeks to be a crucial link in a supply chain and this means thinking of the port as more than a transit hub. The three pillars of this strategy include:
1) Developing foreland policy to improve nautical access and maritime connections.
2) Improve productivity within the port and terminals, value added services and ensure the smooth flow of
Mr. Raj Khalid
Raj Khalid, from Port of Antwerp, on the main models of port management.
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look at ports which offer excellent hinterland connections.The Hinterland Policy includes the shift in the share of barge traffic from that of 33% of total cargo to 42% by 2020 and the shift from 11% to 15% in rail cargo and reduction of road cargo from 56% to 43%. All these steps ensure that today’s conditions of a congestion-free port will continue to prevail from 2020 till 2030.
To sum up, Antwerp Port today is the most cost effective and efficient port for Indian cargo that needs to be shipped to Europe. It houses the largest integrated chemical-petrochemical cluster in Europe and is also the leading port for break bulk and steel and occupies the second spot for containers. The container capacity of Antwerp Port is about 14 million TEU which is more than that of all the Indian ports combined. Within the port, there are five refineries, four steam crackers and the largest concentration of stainless steel storage tanks in the world. Antwerp offers the Indian customer one of the best services with a commitment to be a responsible and caring active landlord port.
goods within the port.3) Improve hinterland connections and increase
multimodal possibilities.
Practical steps takenFollowing this strategy, Port of Antwerp launched the Antwerp Port Community System which is a venture between the port authority and private companies, covering the entire port. It offers a network of systems and solutions for electronic communication, with the aim of making the supply chains interacting with the port more efficient, transparent and reliable. Antwerp Port was considered a river port and the sea ports thought of themselves as the preferred location for vessels with larger capacity.
However, the port undertook a massive dredging project which now makes it accessible to the largest of container vessels. This proactive approach has made Antwerp a port with the nautical access of a deep-sea port but also the hinterland connectivity of an inland port.
The maxim “cargo is king” has proved to be true again. Shippers and customers prefer to have their cargo delivered as close to their location as possible and this makes the lines
FEATURE
AMTOI NEWS : Volume 8 | Issue 114
12th Maritime Power Conference
The National Maritime Foundation (NMF) held its 12th annual maritime power conference on February 9th and 10th in New Delhi. The conference this year was titled – The Blue Economy: Concept, Constituents and Development.
Shri Nitin Gadkari, Hon’ble Minister of Road Transport and Highways and Minister of Shipping, was the chief guest and Shri Rajiv Pratap Rudy, Hon’ble Minister of State for Skill Development and Entrepreneurship (Independent Charge) was the guest of honour. The welcome address was delivered by (Retd.) Admiral RK Dhowan, Chairman, NMF. Admiral Sunil Lanba, Chief of the Naval Staff and Chairman, Chiefs of Staff Committee, delivered the opening address. The valedictory address was delivered by Shri Amitabh Kant, CEO, NITI Aayog. About 250 international
and national delegates participated in the conference which was divided into five academic sessions over one and a half days. The conference achieved its goal to discuss various facets of the blue economy and facilitated a common understanding of the concept.
A white paper on this is being prepared by the faculty of NMF which would contain relevant policy suggestions for India. The proceedings of the conference will also be published as an edited volume in due course of time. As a further outcome of this event, NMF is planning to host an international conference on maritime skill development in partnership with the Ministry of Skill Development & Entrepreneurship to promote implementation of the blue economy.
EVENT REPORT
Discussions on the blue economy helped facilitate an understanding of the concept.
Delegates with Shri Rajiv Pratap Rudy during the event
Esteemed audience from military, and civil world attending the event
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Extract from (Retd.) Admiral Dhowan's speech at the conferenceOur blue planet, the earth has a dominance of the maritime domain with over 70% of its surface covered by water, nearly 80% of the world population living within 200 nautical miles from the coast and about 90% of the world’s trade which transits by sea.
The oceans are rich in oil and mineral resources, they are suppliers of oxygen, absorbers of carbon dioxide, a virtual heat sink, rich in bio-diversity, and have emerged as the global economic highways for transit of trade. The seas and the oceans are therefore gaining new found importance as each day goes by and there is no doubt that the current century is the century of the seas. With depletion of resources on land, humankind has turned towards the oceans and there is a misconception that oceans have an unending resource base and are an infinite sink. Nothing could be further from the truth.
Consequently, we are witnessing a pollution of the oceans and contamination of the natural marine habitat with adverse impact of climate change on oceans. Studies have indicated that 80% of the pollutants in the seas emanate from land and if the current rate of pollution
continues, in a few decades we will have more plastic in the oceans than fish. Harnessing the ocean-based blue economy therefore calls for efficient utilisation of marine resources without substantial environmental impact and ensuring a sustained growth of the oceans....In the last 10 years, the Indian Ocean region has emerged as the world’s centre of gravity in the maritime domain. It is the 3rd largest water body covering an area of 68.7 million sq km and the countries on the ocean rim are home to 1/3 of the world’s humanity. The ocean is rich in oil and mineral resources and 66% of the world’s oil, 50% of world’s container traffic and 33% of world’s cargo traffic transits over the waters of the ocean.
Another distinguishing feature of the Indian Ocean is that 80% of the oil and trade which emanates in the region is extra-regional in nature. This implies that if there is any impediment in the free flow of oil or trade, it would have a detrimental impact not just on economies of the region but global economies as well. It is therefore the collective responsibility of the navies and coast guards of maritime nations to ensure that we keep the global commons unpolluted, safe and secure.
Welcome address by (Retd.) Admiral RK Dhowan , Chairman, NMF
EVENT REPORT
AMTOI NEWS : Volume 8 | Issue 116
INTERVIEW
Congratulations on your retirement! Can you briefly sum up your time in the civil services?I demitted office on superannuation retirement on of November 30, 2016, as the Director General of Shipping and secretary to the government of India. I belong to the 1980 batch of the Indian Revenue Service. I had two central deputations under what is known as the Central Staffing Scheme, outside my parent department. The first one was in the office of the Union Textile Commissioner in Mumbai and subsequently in the Directorate General of Shipping. In all, I had about 11 years in central deputation.
You are now working with the United Nations. Can you tell us about that?I am evaluating an international maritime crime programme. I am assigned as one of the international global evaluators of this programme and am presently doing an assessment.
Does this refer to things like piracy and other forms of maritime crime?It refers to all sea-borne organised criminal activities, including maritime piracy. It could be drug trafficking, human trafficking, cyber-crime on merchant ships, ships used as weapons of mass destruction potentially, or you could even have ships where there could be arms trafficking and money laundering. It could also be wildlife crime. It covers an array of criminal activities which is sea-borne.
What are the biggest challenges facing the shipping industry in India
“Ship operations... can be completely overtaken by a new breed of cyber pirates...”
in the curent time?There are several. One is on the international front and second, the domestic front. On the international front, maritime security is still a matter of concern. There are these hot spots of piracy in West Africa in the straits of Malacca and in some parts of the South American continent. These continue to pose threats to free trade, and particularly, also to the safety of seafarers. The other challenges are potential threats by way of cyber security. With increasing automation, sophistication in adoption of information technology, there is a downside that the ship programming, unless backed by multiple layers of cyber security, can be breached through malware. Ship operations and command in control can be completely overtaken by a new breed of cyber pirates. They don’t need to be pirates in the traditional sense. A hacker or a cyber-jacker can simply take over the vessel. The master will not know what is happening to the ship. He will not be in command and control and the ship could be potentially diverted to another destination and used as in a hijack situation. You will have a new paradigm of piracy.
Nothing like this has ever happened yet, right?There was an instance in south America early this year. So, this is not in the realm of fantasy. The other thing is with regard to floating armories in several parts of the world including close to Indian waters. Floating armories are medium-sized vessels
where there is a stockpile of arms and ammunition and armed guards. They came up as a paradigm during the peak of piracy as one of the responses. It served the purpose reasonably well; this was like a necessary evil. What has happened is the proliferation of these armories internationally without any regulatory framework of any kind has started to pose an imminent threat to maritime security. What could happen is that any force which is inimical to any jurisdiction, can use terrorists to hijack these floating armories and then ram them into the nearest coast. They can be hijacked and can become a potential weapon of mass destruction. The international community needs to take this as a serious threat and build up an international regulatory consensus.
The third threat I see is in this environment where terrorism is now spread across the globe – and we have seen what happened with the use of civil aircraft in 19/11 in the US. Nobody even fantasied that an aircraft could be a potential weapon of mass destruction. I am of the belief that the day is not far when merchant ships, particularly oil tankers and gas carriers, which have immense potential for damage, can be hijacked by terrorists and used as weapons of mass destruction, causing untold misery and damage along the coastline. This is as far as the international scenario goes.
And on the national front..There are several challenges again. One is that the industry must adopt itself to
With over 36 years in the civil services, Deepak Shetty, now retired, has been entrusted by the United Nations to evaluate an international maritime crime programme. Excerpts from a conversation.
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innovation and the use of disruptive technologies in the way it transacts business. We need to augment our tonnage and diversify our profile of ships. For instance, India is now bidding to build LNG ships which are the futuristic regime of ships that are going to come into place. We need to expand our merchant fleet. We need to step up our shipbuilding activities. Today, we command less than a percent of the global shipbuilding activity. The government is seized of it; it has taken several steps. We need to also step up ship repair activity and finally, ship-breaking. We need to focus on environmental friendly breakages, workers’ safety and overall sustainability. There is a need to enhance efficiency of ships in terms of the use of right kind of fuels, so the carbon emissions are minimised, the carbon footprints are lessened to the maximum degree and they are in commitment with our international obligations. This will also mean that the detention of Indian ships under the regime of Port State Control and Flag State Inspection must progressively come down and our safety standards must continue to increase.
The other challenge I foresee is that there is a need to bring in new ships to replace our aging fleet but at the same time we need to be mindful of the fact that we can’t throw the baby out with the bathwater; while we want to modernise our fleet by having new ships, we must be careful that a large number of ships under our fleet are of old vintage. In all fairness, we must give reasonable time to the shipping industry in India to phase out these old ships and say that within a particular period, whether they like it or not, they must bring in new ships.
Then there is a need for cargo support. 90% of our trade is carried out on foreign flagships. We roughly pay about $50-60 billion of freight per year. You can imagine the strain on the Indian economy. So there is a need to provide cargo support. If there is assured cargo support of five-seven years, clearly, the banks will be more open minded and liberal in extending financial assistance.
Next, the tax reforms are an ongoing process. Under the GST regime, you will find increasingly things are getting leveled out on the tax front but there is some work to be done. Tax reforms must happen but the major challenge is the government must ensure whatever policies and reforms happen, there is an element of certainty, stability and tenure because policies should not change frequently. Any uncertainty or instability of a policy is going to be very debilitating to the way shipping companies transact. Broadly speaking, you also need to ensure port charges are low; for example – cargo and terminal handling charges need to be brought down in line with international norms.
What do you think about the Sagarmala programme?I just have a small caveat that this is driven by the Ministry of Shipping. Ideally, they would be the best to speak on it because this is handled centrally. I just have a few thoughts on this; this is an extraordinary piece of initiative that has been launched. This has the potential of being a game changer in the next five-10 years. I think they are already on the right track in terms of holistic and constructive development. As a scheme, in terms of design or architecture of the
programme, Sagarmala is excellent.
Can you rate some of your best experiences as DG, Shipping?Overall, it has been an extremely satisfying career as the DG, Shipping, spanning five years and eight months, both on the professional and personal fronts. If I were to single out some of the highlights, I would probably pick out four or five. The first one would be my personal involvement in the rescue, relief and rehabilitation of 50 Indian national seafarers who were unfortunately the victims of Somali piracy from 2011 to 2014. I must put a caveat here that of the 50, we were able to succeed in getting 48 safely out of the clutches of the pirates, except for two where unfortunately, one was shot dead by pirates on board the ship; and one seafarer, unfortunately, is missing from pirate captivity since close to six years now.
The other one was probably the only maritime diplomatic success which India has achieved in about close to two decades and this was the roll back of what is known as the high-risk area (HRA) in the Indian ocean region.
The third was, again, on the maritime security front when the UN brought to my notice that as many as 72 Indian flags, registered primarily in the Gujarat area, were plying to Somalia. They were taking legitimate cargo but on their return, they were carrying on board charcoal, the export of which had been prohibited and banned by the United Nations. It took me almost about a year of effort to convince them and over one and a half years, by the end of 2014, we were able to completely secure and stop Indian merchant sailing vessels from going
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to Somalia and engaging in charcoal trade. There was another incident involving an Indian flagship which had breached a UN sanction by picking up a consignment of 6 lakh barrels of oil from the National Oil Company of Libya which was prohibited by a security council resolution. To cut a long story short, I did everything possible to see the vessel came back to Libya and discharged its cargo.
Back home, there were two other major trials; one was to ensure that the maritime legislative front was eased up significantly. We have the Merchant Shipping Act of 1958 vintage which was the overarching legislative framework for merchant shipping. This is almost close to about 50 years old and it had become very constricting over a period of time. We took upon the challenge during my tenure as DG Shipping early in the middle of 2015 to rewrite a new Merchant Shipping Bill completely. I am happy to go on record that as a result of concerted efforts by my officers and staff, and also with the support and collaboration of the Indian industry, we were able to bring out a draft bill with near complete consensus with all stakeholders in the middle of 2016 which has now been presented to the Parliament. It has been approved by the Cabinet, introduced in the Lok Sabha and now it stands referred for examination. The highlight of this Bill has been that we have been able to reduce by half the number of sections in the Bill.
We also had a distinction of getting the draft vetted by the World Maritime University in Malmo, Sweden, which is the center of international excellence of the International Maritime Organisation. The other highlight is we were able to draw the best practices in Merchant Shipping Legislation from
three very prominent countries which are Australia, UK and Singapore.
This was one major step in the direction of ease of doing business on the legislation front. Also, when I started, I had 67 merchant shipping rules in place under the Merchant Shipping Act, 1958. We went about identifying 14 merchant shipping rules as completely obsolete and outdated which we no longer required. I was able to propose to the Ministry of Shipping, that these 14 can be completely repealed and done away with. Eventually, in 2015, all these 14 legislations were scrapped. The reduction in the number of rules was one of the largest that any department or Ministry was able to achieve in the national drive after the new government came into place for doing away with old legislation.
The third dimension to simplification was that there was an old act of 1838 vintage known as the Coastal Vessels Regulation Act. In the new Merchant Shipping Bill, we have proposed simultaneously that once this new Bill goes through, the old Coastal Vessels Act of 1838 that is nearly 180 years old will also be repealed. That is now well on the way for legislative simplification.
The fourth and the most important thing we also did was there is an Admiralty Act of 1831 to 1890 vintage. Between 2015 and 2016, we were able to introduce a new Admiralty Bill which has been finally passed by Parliament after being approved by the Cabinet. You will now have a new modern Bill which is very progressive and forward looking.
The fifth and the final piece of legislative reform which I was able to introduce was the MMTG Act, or
INTERVIEW
Multi Modal Transportation Goods Act. We sent to the government, a set of recommendations for amending the MMTG Act with draft legislative amendments proposed. This again is under consideration. Hopefully, if all goes well, there are some significant measures that we have recommended such as dispute resolution to be done by the industry on a self-help basis. This is the fifth and the final branch of the legislative reforms which happened during my tenure.
The final salient highlight of my tenure was, we had to transform the Directorate General of Shipping and make it a very progressive, liberal and forward looking organisation. I realised the only way we could do it was to automate our processes completely and render services purely online. I was able to instill the philosophy that the DG Shipping’s office is only a service provider. In this new era of a liberalised economy, we are only a service provider and the industry is a service recipient. As a result, we did an exhaustive business process re-engineering of all our processes where we interfaced and interacted with our external stakeholders.
By the time I left, nearly 75% of services were totally footfall free, rendered completely online. By September 2017, and we are on track, is that DG Shipping’s office will be 100% online, and one of the few in the country to do so. Not a single service will be rendered offline or by paper. This was on the lines that we wanted to adopt and what the International Maritime Organisation (IMO) in London is doing. It does not have any filing system. These are some initiatives AMTOI has on its agenda this year with respect to maritime logistics.
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AMTOI Salutes Bravehearts of Maharashtra
As a part of its efforts to recognise the contribution of the armed forces, AMTOI provided a personal touch by personally delivering the cheques to the beneficiaries. A senior representative of the AMTOI Secretariat, personally went to visit the bereaved families of the three soldiers who laid down their lives in the line of duty for their country.
Vilas Janrao Uike - 26 yearsSepoy Vikas Janrao Uike, was a resident of Nandegaon, Khandeshwar, Amravati district, Maharashtra. He joined the Bihar battalion at Chandrapur in 2009, and served in Assam and Bengal, before being posted in J&K. He was among the 19 brave-hearts who laid down their lives in the line of duty in September 2016, when four Pakistani terrorists struck the army administration base, in Uri sector of J&K. His father also served in the army for more than 30 years and had retired in October 2015. His father Janrao, said, they were planning to marry him off soon. “We had planned to solemnise the engagement in Diwali, but all our plans have been shattered”, he said.
A donation of Rs. 51,000 towards the welfare of the family was given on behalf of M/s. Saksham Sarthi.
Sambhaji Yashwant Kadam – 32 yearsLance Naik Sambhaji Yashwant Kadam, who belonged to 5 Maratha Light Infantry, was a resident of Janapuri village in Lohatehsil, Nanded district. He is survived by his parents, wife, and a three-year-old daughter. Kadam was amongst the three army-men who attained martyrdom when a group of five terrorists attacked in Jammu. The first attack took place at Nagrota on the outskirts of Jammu city where terrorists, carrying guns and grenades, stormed into an army camp, in which Kadam was killed. The attacks at the army base and a BSF camp are the latest in a series of militant attacks after the September 29 surgical strike on seven terror launch pads in Pakistan-occupied Kashmir (PoK) by the Indian Army.
A donation of Rs. 51,000 towards the welfare of the family was given on behalf of M/s. Tushar Jani Charitable Trust.
Sunil Suryavanshi – 25 yearsSepoy Sunil Suryavanshi died in a massive avalanche in Siachen on February 3, 2017. Suryavanshi was a nursing assistant in the Army Medical Corps and was attached to
the 19 Madras Regiment deployed at Siachen glacier. He was among the 10 army soldiers who were killed in the avalanche. He hailed from Maskarwadi village in Mand in Satara. Suryavanshi is survived by his wife Rekha, daughter Tanuja, father, mother and brother.
A donation of Rs. 51,000 towards the welfare of the family was given on behalf of M/s. Pinaz Xerxes Master Foundation.
Special Report
AMTOI made some donations to the family members of those martyred in the service of the nation, for their welfare.
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A grand event was held on Friday, February 3, 2017, at ITC Grand Maratha, Mumbai, during which due recognition and gratitude was expressed towards our armed forces for their sacrifice and dedication to the nation.
The entire hall was decorated with memorabilia from the armed forces including a Victory Wall, India Gate as a backdrop for the stage, bunker style bar and a vintage military jeep and bike for photo opportunities.
The chief guest for the evening was (Retd.) Admiral Robin Kumar Dhowan. Among the
dignitaries who graced the event were, Dr. Malini Shankar, DGS, Amitabh Kumar, Jt. DGS, Deepak Shetty, former DGS, Atul Kulkarni, Advisor-IPA,
Mrs. Anuradha Gore, Michael Pinto, former Secretary, Shipping, Julian
Bevis, Maersk Line, Raj Khalid, POA, Peter Huyghebaert, Consul General of Belgium, Marc Ven Peel, POA, Eddy Bruyninckx, POA, Adarsh Hegde, Allcargo Global Logistics, Capt. M M Saggi, NMIS, Admiral Anand Kalaskar, CFSAI-
President, Anil Radhakrishnan, Adani Logistics, Nithin Menon, Swire Shipping, Capt. Anoop
Sharma and Dr. Narula of SCI, Capt. Kapil Anand of Gateway Distripark, and Capt. Thaddeus Chooof OOCL.
AMTOI Celebrates Annual Day with a Purpose! The entire hall was decorated with memorabilia from the armed forces.
Vivek Kele, P r e s i d e n t , A M T O I , d e l i v e r e d the welcome a d d r e s s , s h o r t l y followed by a m o t i v a t i o n a l video on the Indian army. Dr. Malini Shankar then addressed the audience
on the changes in the shipping industry. Mrs. Anuradha Gore, mother of slain brave-heart, Captain Vinayak Gore, gave an emotional speech on the sacrifice our jawans (soldiers)
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make and the lack of recognition to them.
The keynote address on Indian maritime history was given by (Retd.) Admiral Robin Dhowan in true Navy style, which had the audience completely enthralled; met with a thunderous applause.
Julian Bevis of Maersk, in his address, said that he was proud to have associated with a trade body like AMTOI who do a wonderful job for the betterment of EXIM trade. He also appreciated the role of the Indian Navy in protecting the maritime borders and giving secure passage to merchant ships.
After the speeches, a cake was ceremoniously cut by
the dignitaries with a regimental sword, keeping the evening’s theme in mind!
AMTOI then presented a cheque of Rs 51,000 to the Queen’s Mary Technical institute which rehabilitates disabled soldiers. A donation was made to martyrs’ wives Mrs. Rekha Suryawanshi, w/o (Late) Sunil Suryawanshi, by the Pinaz Xerxes Master Foundation, Mrs. Shital Sambaji Kadam w/o (Late) Sambhaji Kadam, by the Tushar Jani Charitable Trust, and Mrs. Bebital Uike Janrao w/o (Late) Vikas Janrao Uike, by Saksham Sarthi (Teamglobal Trust). The evening ended with the much-awaited raffle draws which was met with tremendous enthusiasm by the audience and was followed by networking, cocktails and dinner. It was an enjoyable get-together of a closely-knit group, made special by the recognition given to our armed forces. Many members spontaneously pledged donations for the welfare of our brave
soldiers.
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