Vallarpadam's woes mount with Customs-SEZ standoff

Problems at the International Container Transhipment Terminal (ICTT) at Vallarpadam- that was supposed to make Kochi a preferred global transhipment terminal - seem never to end. To add to the old issue of Cabotage comes a new one- a spat between the Special Economic Zone (SEZ) and the Customs department at Kochi over the inspection of containers at the terminal.  The two are at loggerheads, with the SEZ administration saying that inspection by Customs of transhipped containers within the SEZ is unacceptable- the Customs department says that this is their statutory duty. The Customs wants to set up an office inside the ICTT, something that the SEZ authorities have refused to allow so far. 

News reports say today that the situation has become so serious that India Gateway Terminal Pvt Ltd IGTPL)- the ICTT operator- has approached the Kerala High Court against the Customs authorities move to withdraw its staff from the terminal gate. The company has also cited the Ministries of Shipping, Finance and Commerce for delay and inaction in this connection. IGTPL says that they will not allow Customs authorities to examine containers inside the ICTT because the entire premises were a processing zone under the SEZ Act, which did not permit such examination inside the facility. 

Transhipment containers coming in at Vallarpadam are manifested presently by the SEZ at the ICTT and a copy furnished to the Kochi Commissioner of Customs. However, the Customs department says that SEZ has no authority to inspect the containers. “Inspection of export-import cargo is the statutory duty of Customs. Even the SEZ Act does not allow the SEZ authorities to inspect and clear the cargo,” they claim.

Reports about a week ago said that Customs blocked transhipment of around 60 containers that had come in from Tuticorin, discharging them from the ‘Turungia Express’ which eventually sailed out much delayed without the containers on board. An angry Dubai Port World official- DP World operates the Vallarpadam ICTT- said after the incident, “Trade will be hit if these kinds of incidents are repeated. If this situation continues, our efforts to attract more mainline services to the ICTT will become futile.” 

Rumours are afloat that some mainline vessel operators are rethinking their Vallarpadam ICTT commitments already. One operator that had started a weekly European service is set to cancel Kochi and shift to Colombo instead, observers say, pointing out that transhipment containers that arrive in this manner would not be subjected to delays with repeated Customs formalities. Says an ICTT officer, "Repeated verifications will only delay the movement of containers and the whole objective of transhipping will be futile. If the cumbersome procedures continue, international shipping lines will definitely divert and continue to use Colombo as their transhipment hub.” 

Many agree that the Vallarpadam ICTT, commissioned in February this year, will continue to remain uncompetitive unless concerted and timely action is taken. The advantages of Kochi- an all weather natural port situated close to major sea routes- are being frittered away anyway with the old issue of a possible relaxation of Cabotage for the ICTT still to be resolved, they say. 

Some experts are of the opinion that a relaxation of Cabotage is not required, and that Vallarpadam can be supported instead by a more aggressive enforcement of Cabotage on the India- Sri Lanka route. Proponents of this course of action point out that by treating this route as coastal movement- and thereby invoking the Cabotage provisions in the Indian Merchant Shipping Act- the advantages mainline vessels enjoy by using Colombo for transhipment of goods into India will simply disappear.  Seen from this perspective, it would appear that India's Cabotage enforcement is too loose rather than too tough.