The Custom broker is at the centre of international business. The government is willing to trust, now the burden is on the Customs broker to respect the trust and there will be immense opportunities to make cross border cargo movement easy, fast, while reducing the cost to manufacturers, making them more competitive in global markets.
Let me begin by asking you, Covid-19 pandemic has impacted every business segment that we know. I would like to understand from you what kind of impact and changes it brought into customs and freight forwarding operations, apart from effecting the business badly?
We need to remember one thing that from the day the lockdown was announced in March, every custom broker and freight forwarder in India was worried about his client’s cargoes. Even at the beginning when there wasn’t so much awareness about the pandemic but you always saw across the country custom brokers, their staff, freight forwarders, and of course, all the ancillary services risking their lives, going out and trying to finish the work. Customs was working throughout. So, it was a very challenging period but this community stood by the exporters and importers. They participated in so many initiatives of the government to ensure that cargos move. But now, with things settling down and the real problems coming out, it is unfortunately this very segment of custom brokers and freight forwarders who are feeling the brunt of the pandemic because exporters and importers are not doing as well as they should be doing.
Shipping lines have their own problems, customs have their own limitations, and the person who gets sandwiched between all of this is the service provider. The situation across the country while everyone is trying to be optimistic is that the smaller service providers are really in very serious trouble, the medium ones are trying to find their bearings and solutions to continue and the bigger ones are trying to work out more and more solutions to remain afloat. I think we are in a period now when the service provider is in trouble and no longer the exporter or importer. On the other side, I must also add that the associations and the federations of the service providers are also trying their best to give new advices, new models and new concepts to the freight forwarders and the Custom brokers in India.
One thing, which I would like to mention over here is that all the facilitation that Indian Customs is announcing to ease the movement of cargo across borders is actually a MGNREGA scheme for the Custom brokers. It is high time the Indian Customs broker looked at all these facilitations as a simple MGNREGA scheme for themselves because more the facilitation, there is more liability on the importer and the exporter, there is going to be more work post clearance than pre-clearance and it is for the Indian freight forwarder, custom broker to take full advantage of the facilitation, work out new models for themselves and see how they can take this into the future.
When you talk about these new models and the changing scenarios, Indian Customs department has brought in a lot of changes in their regulatory system, approach and operations. So, are the Custom house agents, the community prepared for the pandemic kind of scenarios and the shift that is happening?
Unfortunately, no. But there is a lot of communication going from the leadership in India, explaining the new models to the custom brokers, requesting them to look at it carefully, make administrative changes within their own offices, and take full advantage of the facilitation that is happening. To give you a very simple example, the government’s original target was to get at least 50,000 to 60,000 companies in India registered as AEOs (Authorized Economic Operators). This was a great scheme for the custom broker to apply for his clients and get it.
Then now we have the manufacturing and other operations in the warehouses, both private and special. Who is going to manage all of it? The custom broker is very capable, he understands the whole thing and he must move out of going to container freight station or the custom station and doing the work, and move into the offices, the warehouses and the factories of the exporters and importers, and become a true service provider. And I think it will happen because there is so much amount of information which is going out, so much amount of pressure that the leadership is putting on its members today that we must support the facilitation, and we must find our advantage within the facilitation. The custom broker and the freight forwarder in India is genuinely a multi-talented, very capable entity, it is just that he needs to look inside himself and the market as such, the world must recognize his ability. I think it will happen. I am very positive about it. I am looking at a time when kids at 16 and 18 will say, cargo is where I want to be for the rest of my life, and I think, we are in that direction.
Let us talk about the changes that are coming from the department side. A little while ago, we discussed that Indian customs has brought in lot of changes and innovation in their approach. You have been closely following these customs operations for many decades. So, what else needs to be done from the department side?
What has been the shift? The real shift has been that the government is now willing to trust. It’s only for the last 4 or 5 years that Indian customs is using the word trust. They are going out of their way to say that I want to trust people. And now the burden is on the Custom broker, exporter, importers, terminal operators, custodians and shipping lines to respect that trust. If we can respect that trust that the government is putting onto us, there are immense possibilities for the government to make this movement of cargo across borders still more easy, still faster, and still work out in a manner that the costs of the Indian manufacturers go down, their volumes go up, and they are in a position to compete.
Like, to give you an example, this manufacturing and other operations – if you look at it, it’s primarily a scheme where the government says I will help you manage your cash flows. What the government can do is take this trust factor ahead and do intelligent technology based controls and remove this concept of bonded separately, domestic separately, and come up with a scheme which says, yes you can do whatever you want as long as you can manage the safety and the security of the country, you can manage the sovereignty of the country and you can look after the revenue with intelligent controls which is now possible. Technology will support it. It’s only the mindset that has to be let go a bit wider but for that, all my interactions with the government tell me that they are seeing, let us see how the Indian manufacturers, exporters, importers and service providers react.
So, the burden is on us, to tell the customs, the government of India, the participating government agencies and the director general of foreign trade we are capable of being trusted, let’s loosen up much more, the more we loosen up, the more we make it liberal, it will benefit the Indian economy only.
Do you think all the regulations that brought in all the changes by the customs are working effectively for the ease of doing business? Because I am given to understand that some of the initiatives like faceless inspections ran into some issues causing delays in clearances. So, what is your take on that?
Change is always painful. And we are talking about a country which is filing approximately 22,000 to 24,000 import declarations on a daily basis. We are talking of bureaucracy which is working top down. So, they have still not been able to take every level of their team into confidence and get them to work on the same mindset. And then comes the service providers. The service providers are also a bit afraid that what I will do if I do not meet a Customs officer? Unfortunately, India transited from being domain Custom broking business into a relationship Custom broking business.
And so, we are having challenges both internal and external. We are having challenges with the large volume of work that is happening. And now comes another thing and that is that each of the customers had their own typical way of handling certain commodities, handling certain processes. Now with so much amount of standardization and uniformity coming in, and officers handling products which they did not handle in the past, this confusion and this problem had to happen. To the credit of the few officers responsible for faceless, I must mention that they worked 24×7 to find solutions to it, and I am hopeful that maybe in the next 3 or 4 weeks, we will settle down.
It’s a bit upsetting that trade associations go to the press, go outside and say I am having trouble, I am having trouble rather than going to the government and saying come, let’s talk about my troubles, find a solution to my troubles, you give me some leverage. You are messing up because of your technical problems, give me financial benefit. Now, that is something that the government didn’t factor in. You know the government didn’t factor in that there is going to be delays because of a new system, there are going to be delays about the way people have been trained to work, which is costing the importer and the exporter, not only in real terms, in financial terms, but also delayed production, export and domestic sale.
So, yes, we are in a very tight position at this point in time, but it looks positive to me. And we must accept this is irreversible. We should resist every possible attempt to reverse this in whatever manner possible, but it must remain irreversible.
When Custom house agents have to prepare for these changes, shifts that are happening and also get future ready, as an educator, what are the skill gaps that you see? What would be the responsibility of the government and also the trade to make ready the next generation of Custom house agents?
India has been following a concept which said that I could sit for one exam in my lifetime and I am permitted to work with the government on Customs for the rest of my life. They never factored in so much dynamism, so much change which is coming in. Then when they brought in the computers, we had a whole bunch of people, more than 90% of people working in this trade who had never touched a keyboard. Now couple that with the basic qualifications that have been mandated.
The basic qualifications in the past were 10th standard. Subsequently, those qualifications became 12th standard. But we all understand that a 10th standard or 12th standard pass individual is not so good at reading and interpreting what is coming out in English. What has been my request to the government through my federations and the other association has been – please fund the federation and the associations so that we can undertake lot of trainings and upgrade these 200,000 to 300,000 people who have been working in this segment for a lifetime. We cannot introduce a new style and say that all the people who cannot adjust to it, please go away. We are talking at least 200,000 to 300,000 families who are dependent on this business.
Then, we have been requesting for a continual certification, not a mandated certificate, but a continual compulsory certification done by the federations. We must recognize that training is expensive, but in India, we have never respected skill training as a product, so we don’t even recognize that it’s an expensive product. We have got to understand that in the future, which is even today, that any custom broking company is as good as the weakest person in the organization and not as good as the owner which was in the past. So, the government must recognize to upgrade all these people who have been spending a lifetime. They have got so many capabilities, knowledge and solutions to the problems. We must work to help them retain their jobs.
We must work to a model where the government proactively stands with us, and helps with upgrading the people because at the end of the story, the custom broker is at the centre of international business, and if he is a weak link, the economy of the country is going to suffer. If you look at the government, they don’t recognize skilling for Customs as a product. The Logistics Sector Skill Council is trying to make an effort over there, but none of the state governments recognize it as a product. Everyone is talking maritime, shipping, logistics, but nobody is talking core activity. So, somebody in the government has to wake up and say, yes, we will support you, we will stand by you, and we will financially back you to do great work in this space.
Finally, Mr. Samir Shah, what are the lessons that you have learnt from Covid?
Lots of lessons. The first is that each of us is capable of so many things which we never did. You know, I worked throughout the lockdown. Customs was recognized as an emergency service. I used to come to my office every day and I suddenly realized that I am the only person so I have to do everything. So, I used to do the work of my peon, executive assistant, receptionist, and I found that I could do it. I also realized that most of the people spend their time thinking – no, this is not important so I don’t want to do it. This is a cheap activity; I can afford to get somebody over here.
What I am seeing is that in the future, the Indian freight forwarder will be stuck to his computer screen whether it’s on his desktop, laptop, iPad, or smartphone, and each person will work much more than he has been working in the past. I find today that we are still in a semi-lockdown position – every day, you have 2 or 3 staff calling in and saying, sir, I won’t be coming in for the next 14 days; you have people coming in with all sorts of problems so every office is running at least 60% – 70% capacity only but we are still performing.
So, one of the biggest learnings was that we can continue to learn. It sounded good in the books and with the nice motivational speakers, but we experienced it ourselves. Another thing is that the average Indian is good with technology. He only needs to be guided – that you look press this button first, then you press this button and you will be sorted. But once you teach a person how he should use the technology, I find that besides being great software developers, Indians are very good at adapting to using technology. I have seen so many custom broker staff who have passed their 10th standard exam maybe 30 years back using the smartphone so nicely, interacting with the custom systems so nicely, and what I also would like to add is that the lockdown has the families closer because we couldn’t go around and meet people, we started doing video calls, FaceTime, Zoom calls – even the nuclear families had to spend so much time with each other.
So, there was a lot of good, while of course, it’s a pandemic, it has its sad effects, its bad effects, it’s going to be long term before we can get up, but we must recognize that we are not going back. This is the new normal, and this is how we will have to take the future.