India has been slowly but surely making progress toward digitizing its international trade. Digitization has made it easier to conduct and monitor international trade, resulting in a more efficient and streamlined process. Digitalization plays a key role in building resilience as it enables the flow of information. However, 30 years after the “go-live” of the internet, and 25 years after purely digital cross-border eCommerce processes were established, trade documentation processes are still largely manual.

How is Digitization Transforming India’s International Trade?

Two critical sectors that are undergoing massive digital transformation in this regard are logistics and banking. Banks have taken important digital initiatives such as intelligent document recognition, replacing wet-ink signatures with e-signatures, and implementing electronic bank guarantees. The recently announced National Logistics Policy (NLP) -marine is strongly oriented towards digitization and interoperability across the supply chain, thereby cutting costs and reaching out to small and medium enterprises.

One factor which will accelerate the increase in exports is the reduction in the cost of Logistics. As per the 2018 World Bank logistics performance index, India is ranked 44th and aims to be in the top 25 countries by 2030 thereby needing big reforms and innovations in this sector leading to the formulation of a National Logistics Policy (NLP).

Steps Taken by India to Digitize its International Trade

There are numerous examples of digitized international trade in India. Some of which are

1. Introduction of the Goods and Services Tax (GST). This has made it easier for businesses to comply with international trade regulations and has resulted in improved efficiency and cost savings.
2. IDPMS is an IT-based system of RBI for monitoring import transactions, while EDPMS monitors export transactions. Both systems track transactions through the banking system in compliance with FEMA, 1999, and FEM (Current Account Transaction) Rules, 2000.
3. This enabled banks to lodge export bills based on the information made available of Shipping Bills/EDF/ BoE in I/EDPMS and additional information required can be submitted by the exporters in the soft format in excel. for selected exporters/importers by due adherence to chapter 3 of the IT Act, 2000.
4. e-invoicing has made it easier for businesses to send invoices electronically, eliminating the need to physically send them. This has resulted in improved efficiency and cost savings.
5. Issuance of digital Shipping bill in soft copies
6. Combined with being the first major central bank in the world to start a pilot project with its own virtual currency for the wholesale digital rupee in the pilot run instead of the UAT environment
7. Internationalize indigenous payment modes through the UPI payment system, an alternative to the SWIFT payment system, and Internationalisation of Rupees

Challenges of Digitization in International Trade

The digitalization of trade documentation may be considered to be a mundane task, but the impact it could deliver would be significant. Various international bodies have estimated the effect that digitalization would have on global trade. The International Chamber of Commerce (ICC) projects that paperless trade could create $267 billion of additional exports across G7 countries, compared to base forecasts, by 2026.

Internationally

• The most important part is implementation – digital standards for the bill of lading have been established. Data and process standards for the submission of shipping instructions and issuance of the bill of lading have already been established through DCSA and accepted by nine container carriers that represent 70 percent of containerized trade. Need to update or clarify existing trade rules and commitments globally
• Electronic bill of lading transactions already exist—and they work. Over the past 25 years, several providers such as Bolero International and WAVE BL have established platforms to exchange electronic bills of lading. While around 1 percent of all bills of lading is digital today, this adoption proves that the process has been tested and it works
• Trade rules are traditionally predicated on identifying whether products are goods or services and the borders they cross. But, in the digital era, these distinctions may not always be clear-cut.

Domestically

• The efforts in India are all in Silos there has to be a single window that has all stakeholders on the same platform Viz. Exporters > CHA> Customs>Shipping Lines>Banks> Chamber of Commerce > Insurance Companies > DGFT > Government……..
• Following initiatives executed by Singapore and Abu Dhabi have set the regulatory framework to treat digital documents just like paper-based documents. The United Kingdom has already announced that digital trade documentation forms part of the government’s legislative agenda

Conclusion

The Indian government has taken several steps to make it easier for businesses to conduct international trade and has implemented numerous digital initiatives to reduce the time and cost associated with the process. Additionally, businesses can take advantage of various courses, tools, and services to help them with digitization.

The future of digitization in India’s international trade looks bright, and it is expected to continue to grow in the coming years. The government’s ongoing efforts to make it easier for businesses to conduct international trade and the increasing number of digital initiatives will ensure that India remains at the forefront of international trade.

All relevant stakeholders could accept a defined approach, and commit to implementation, ideally guided by a neutral party