India’s Accession to UN TIR Convention to Boost Foreign Trade

Posted by Reading Time: 5 minutes
By Koushan Das

Earlier this year, the federal government approved India’s accession to the Convention on International Transport of Goods under cover of TIR Carnets (TIR Convention). This is an international transit system to facilitate seamless movement of goods amongst its member states.

Being party to this convention will enhance India’s connectivity with Southeast Asia and the Eurasian continent, and could make India a major transit and trading hub between the two regions.

Related Link Icon-IB RELATED: India City Spotlight: Investing in Vishakhapatnam 

The TIR Convention facilitates India’s efforts in the building of the International North-South Transport Corridor (INSTC), which will connect the India Ocean and Persian Gulf to the Caspian Sea, through Iran and then onwards to St. Petersburg in Russia and northern Europe.

The accession to the TIR Convention will also benefit the India-Myanmar-Thailand Trilateral Highway, along with the Bangladesh-Bhutan-India-Nepal Motor Vehicles Agreement.

TIR Convention

The Customs Convention on International Transport of Goods under cover of TIR Carnets, 1975 (TIR Convention), is an international transit system under the United Nations Economic Commission for Europe (UNECE) to facilitate movement of goods within and among the parties to the Convention. At present, there are 70 parties to the Convention, including the European Union. The system covers transit by road, rail, waterways, and maritime transport.

TIR provides internationally valid harmonized documents known as TIR Carnets to transporters to streamline border crossing procedures. The convention allows customs clearances to take place at internal customs locations, thereby avoiding congestion at border crossing checkpoints and ports.

Sealed goods in transit are allowed by checking only the seals, which reduces transport and transaction costs and considerably reduces border delays. TIR Carnets also guarantee the payment of customs duty and taxes for transit goods, assuring security and supply chain efficiencies.

Professional Service_CB icons_2015 RELATED: Pre-Investment, Market Entry Strategy Advisory

How the TIR Convention fits in with INSTC, EAEU

 The INSTC is a 7,200 km multi-modal transportation route established in 2000 by Iran, India, and Russia. Other members include Armenia, Azerbaijan, Belarus, Bulgaria (observer status), Kazakhstan, Kyrgyzstan, Oman, Syria, Tajikistan, Turkey, and Ukraine. The trade route aims to connect the Indian Ocean and Northern Europe, navigating through the Persian Gulf, Caspian Sea, Iran, and St. Petersburg. India currently depends on trade routes through China and Europe to reach Russia and EU, which are expensive and time consuming. 

Once implemented, the INSTC will reduce cost and time of deliveries by 30-40 percent. As per the trial runs in 2014 and 2016, goods transported from Mumbai to St. Petersburg through the INSTC took three weeks, compared to the six weeks it currently takes by sea.

Iran’s deep-sea port Chabahar, jointly developed by India and Iran is also expected to be integrated into INSTC upon completion, offering an alternate route to Central Asia.

Parallel to the INSTC, India has been in negotiations for an FTA with the Eurasian Economic Union (EAEU), which has an integrated single market exceeding a GDP of US$4 trillion. Such a deal will boost trade and reduce India’s trade deficit with the region.

The EAEU comprises of Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan. An FTA with the EAEU will certainly be in India’s best trade interests given its accession to the TIR Convention. This is because the resource rich region offers a huge market, with a trade potential of US$37 to US$62 billion. India’s current trade with the EAEU countries stands at US$11 billion.

According to a recent Joint Feasibility Study conducted by India and EAEU for the FTA, the chemical, rubber, and plastic products sector is expected to witness the highest growth in exports followed by electronic equipment and crop products. In terms of Indian imports, chemical, rubber, and plastic products followed by minerals and metallurgy are predicted to rise once the FTA is in place, complemented by the newer trade route.

Related Link Icon-IB RELATED: India and Russia Collaborate on Joint Development Funds, Technical Innovation Projects

Improved linkages with Central Asia to Southeast Asia

While INSTC focuses on increasing cooperation with Central Asia and Europe, India is equally focused on increasing trade relations with South and Southeast Asia. In South Asia, the Bangladesh-Bhutan-India-Nepal Motor Vehicles Agreement is expected to increase inter-regional trade by 60 percent. In Southeast Asia, the India–Myanmar–Thailand Trilateral Highway, presently under construction, will offer an alternate trade route for Southeast Asian countries. The trilateral highway is planned to be extended further to Cambodia, Laos, and Vietnam, allowing easier access to the growing ASEAN market.

With increasing trade relations and development of efficient trading routes, India has the potential to become a major regional trading and transit hub in the near future.

 

About Us 

India Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, Indonesia, Russia, the Silk Road, & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout India and the Asian region. We maintain offices in Delhi and Mumbai and throughout China, South-East Asia, India, and Russia. For assistance with India investment issues or into Asia overall, please contact us at india@dezshira.com or visit us at www.dezshira.com.

 

Related Reading-IB

dsa brochure

Dezan Shira & Associates Brochure

Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.


 An Introduction to Doing Business in India 2017

An Introduction to Doing Business in India 2017 is designed to introduce the fundamentals of investing in India. As such, this comprehensive guide is ideal not only for businesses looking to enter the Indian market, but also for companies who already have a presence here and want to stay up-to-date with the most recent and relevant policy changes.


Payroll processing and compliance in India

Payroll Processing and Compliance in India

In this issue of India Briefing Magazine, we discuss payroll processing and reporting in India, and the various regulations and tax norms that impact salary and wage computation. Further, we explain India’s complex social security system and gratuity law, and how it applies to companies. Finally, we describe the importance of IT infrastructure, compliance, and confidentiality when processing payroll in India.

 

Leave a Reply

Your email address will not be published. Required fields are marked *