The recent decision by the government of India to provide 24-hour Customs clearance services at major ocean ports and airports may come as a surprise to many in the Canadian import/export community, especially since many of us take these services provided by CBSA (Canada Border Services Agency) in Canada for granted. It also serves as a reminder for Canadian organizations doing business in India that “due diligence” includes developing an understanding of all the various facets of supply chain management in foreign trading-partner countries, including Customs clearance.
In a high-tech industrialized nation such as Canada, 24-hour Customs clearance services are available at more than 20 ports across the country to support trade. Many transportation carriers, Ports, airports and international land border crossings operate around the clock, seven days a week and the inability to clear incoming shipments on a timely basis could result in significant backlogs at border points. This is particularly true of the daily trade flows between Canada and the United States, our largest trading partner.
India is not currently a Top 10 trading partner with Canada, but it is an emerging economy and one that Canada has been engaging with in free-trade talks since 2010. Both countries are hungry for trade and there are lots of opportunities for growth, as evidenced by the World Trade Organization report “Merchandise trade: leading exporters and importers, 2009” which lists Canada in 12th spot, responsible for 2.2% of merchandise trade, and India at #22, with 1.2% of merchandise trade.
Despite the common aspirations of importers and exporters in both countries however, there are many other factors to consider in terms of developing a successful trading relationship, and contrasts abound between the two nations. Canada has a population of approximately 34 million and a land mass of 9.9 million square km, compared to India with a population of over 1 billion and a land mass of 3.3 million square km. On the other hand, the trade balance between our two nations is relatively even. In 2010, Canada’s exports to India totaled $2.15 billion (CAD), while imports amounted to $2.12 billion (CAD).
While there are tremendous opportunities for grown in trade, Canadian importers and exporters should also be aware that there are differences in transportation infrastructure between the two countries that can impact the timeliness of shipping goods. A Canadian Services Coalition report in 2007 observed there are significant “infrastructure inadequacies in India when it comes to roads, rail, ports, and airports”. According to that report, “Most of India’s national highways are one lane and there is a lack of highways connecting rural areas to the economic hubs of the country.” In that respect, Canada’s infrastructure may have an advantage, at least in terms of its capacity to facilitate the movement of goods.
But the observation that “it can take up to 2 hours during rush hour to go the 30 km from Mumbai’s international airport to the heart of the city” is probably similar to that in Toronto on occasion! The point however is that not having a timely system for Customs clearance only adds to the potential for delay in a growing economy, and is a factor that importers and exporters should be aware of.
Posted by: Laurie Turnbull, CITT, P.MM – Supply Chain Consultant, Cole International