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Legal Framework –Logistics

Date | VersionMarch 21st 2018 | 1.0
Keywords‘Legal Framework’, ‘Logistics Sector’, ‘Port and Inland Waterways’, ‘Indian Ports’, ‘Civil Aviation’, ‘Warehousing’, ‘Roadways’
List of Legislations Referred‘The Indian Ports Act, 1908’, ‘Major Ports Act, 1963’, ‘Inland Water Ways Authority of India Act, 1985’, ‘Land Ports Authority of India Act, 2010’, ‘The National Waterways Act, 2016’. ‘The Aircraft Act, 1934’, ‘Carriage by Air Act, 1972’, ‘Airports Authority of India Act, 1994’, ‘The Anti-Hijacking Act, 2016’, ‘Warehousing (Development and Regulation) Act, 2007’, ‘Special Economic Zones Act, 2005’

Market demand drives the logistics sector. It follows that the scale and level of logistics in any jurisdiction is generally speaking a reflection on the stage of the economy. Having said that, the role of the government cannot be undermined. Governments can and should play a proactive role in the logistics market development. However, the government policies should focus on enabling logistics enterprises, to participate in a progressive manner in the development of a robust logistics market.

The government can serve three fundamental logistics development functions:
i. Provide policy(ies) and legal framework to enable a level playing competitive environment for safe, secure and efficient operation of the logistics sector.
ii. Provide infrastructure, and regulatory framework to encourage the logistics sector to move toward energy and environmentally friendly operations and reduce negative externalities.
iii. Develop policy(ies) and legal framework to address areas where market or private initiatives may not work effectively, such as by improving national transport and logistics infrastructure, expanding the use of information technology, and developing technical and operational standards.

India is in the midst of an economic and social transformation that will reshape government policies.The current legal framework with respect to different sectors of the logistics industry are as follows:

1. Ports and Inland Waterways

1.1. Legislative Framework for Ports and Inland waterways

i. The Indian Ports Act, 1908: applies to the minor ports in India. It provides for amongst other matters, appointment of port officials and their powers and functions, rules for safety of shipping and conservation of ports, levy of port dues, fees and other charges etc.

ii. Major Ports Act, 1963: applies to the major ports and provides for amongst other matters, constitution of Board of Trustees and committees, constitution of Tariff Authority, imposition and recovery of rates at the ports etc.

iii. Inland Water Ways Authority of India Act, 1985: The act provides for constitution and appointment of the Inland Waterways Authority of India which is responsible for among other functions, the power to permit setting up of infrastructural facilities for national waterways, carrying out surveys and investigations for the development, maintenance and better utilization of the national waterways, regulation of the construction or alteration of structures on across or under the national waterways etc.

iv. Land Ports Authority of India Act, 2010: The Act provides for the establishment of Land Ports Authority of India to put in place systems which address security imperatives, and for the development and management of facilities for cross border movement of passengers and goods at designated points along the international borders of India.

v. The National Waterways Act, 2016: The Act make provisions for existing national waterways and provides for the declaration of certain inland waterways to be national waterways and also to provide for the regulation and development of the said waterways for the purposes of shipping and navigation and for connected matters.

1.2. Governance Structure

i. The Ministry of Shipping encompasses within its fold shipping and ports sectors which include shipbuilding and ship-repair, major ports, national waterways, and inland water transport. The Ministry of Shipping has been entrusted with the responsibility to formulate policies and programs on these subjects and their implementation.

ii. The non-major ports i.e., minor ports fall within the purview of the respective State Governments.

1.3. Tariff

i. Standardization desired.

ii. The regulations related to major ports’ tariffs are governed by the scale of rates framed under the Major Port Trust Act 1963. Every port will have its own rules/guidelines for collection of tariffs. In case of the Mumbai Port, the Vessel Agents and the Clearing House Agents maintain an account with the Mumbai Port Trust, wherein they make regular payments as per the scale of rates, into these accounts for the services availed by them. As regards the minor ports, they frame their own regulations for the tariffs that are to be imposed on ports and terminals.

2. Civil Aviation

2.1. Legislative Framework

i. India has open sky agreements with
a) US, without restriction; and
b) UK, with some restrictions.

ii. Indian also has a limited open-sky with South-east Asian Nations (ASEAN) and bilateral agreements with more than 100 countries.

iii. The Aircraft Act: An Act for better provision for the control of the manufacture, possession, use, operation, sale, import and export of aircraft.

iv. Carriage by Air Act, 1972: An Act to give effect to the Convention for the unification of certain rules relating to international carriage by air signed at Warsaw on the 12th day of October, 1929 and to the said Convention as amended by the Hague Protocol on the 28th day of September, 1955 a [and also to the Montreal Convention signed on the 28th day of May, 1999] and to make provision for applying the rules contained in the said Convention in its original form and in the amended form (subject to exceptions, adaptations and modification) to non-international carriage by air.

v. Airports Authority of India Act, 1994: An Act to provide for the constitution of the airports Authority of India and for the transfer and vesting of the undertakings of the International Airports Authority of India and the National Airports Authority to and in the Airports Authority of India so constituted for the better administration and cohesive management of airports and civil enclaves.

vi. Airports Economic Regulatory Authority of India Act, 2008: An Act to provide for the establishment of the Airports Economic Regulatory Authority to regulate tariff and other charges for aeronautical services rendered at airports and to monitor performance standards of airports and also to establish Appellate Tribunal to adjudicate disputes .and to dispose of appeals.

vii. The Anti-Hijacking Act, 2016: An Act to give effect to the Convention for the Suppression of Unlawful Seizure of Aircraft.

viii. National Civil Aviation Policy, 2016

ix. Airport Infrastructure Policy, December 23, 2016 (to be read with the National Aviation Policy): The Policy amongst other things seeks to:

a) provide a boost to international trade;
b) provide airport capacity ahead of demand, in order to handle an increasing volume of air traffic and to garner the maximum share of traffic in the region;
c) ensure total safety and security of aircraft operations by the introduction of state-of-art air traffic, security and related services;
d) provide multi-modal linkages;
e) provide a market orientation to the present structure, bridge the resource gap and encourage greater efficiency and enterprise in the operation of airports, through the introduction of private capital and management skills;
f) to foster the development of strong airport infrastructure, maintaining a balance between the need for economic viability and the objective of equitable regional dispersal of infrastructural facilities;

In the achievement of the above objective, to lay special emphasis on the development of infrastructure for remote and inaccessible areas, especially the North East, the hilly and island regions.

x. Integrated framework of air cargo logistics is missing.

xi. Policy Guidelines on Air Freight Station AFS, October 28, 2014: Air Freight Station (AFS) is an Off-airport Common User Facility equipped with fixed installations of minimum requirements and offering services for handling and temporary storage of import and export cargo etc. AFS is the counter part of Inland Container Depot (ICD) for Maritime Cargo. This policy initiative of AFS it to create an enabling environment for promoting International Air Cargo operations by reaching out to hinterland regions of the country besides de-congesting the congested Air Cargo terminals in some gateway International Airports that face high dwell time.

3. Roadways
Separate Ministry for each mode of transport. Inter-governmental division of responsibilities is somewhat centralized and lacks governance infrastructure for inter-governmental co-ordination around the points where the pieces of transport system are linked together.

3.1. Policy Framework

i. 2001 – Task Force on Integrated Transport Policy

ii. March 2015 – SagarmalaProgramme was approved by the Cabinet under which, 415 projects, have been identified across port modernization & new port development, port connectivity enhancement, port-linked industrialization and coastal community development for phase-wise implementation over the period 2015 to 2035.
iii. April 2016 – National Perspective Plan was released for the comprehensive development of India’s coastline and maritime sector.
iv. October 2017 – Central Government announced the First Phase of the BharatmalaProject, which envisages the construction of 34,000km of roads.

4. Warehousing

4.1. Legislative Framework

i. Warehousing (Development and Regulation) Act, 2007: The main objectives of the Warehousing (Development and Regulation) Act, 2007 are to make provisions for the development and regulation of warehouses, negotiability of warehouse receipts, establishment of a Warehousing Development and Regulatory Authority (WDRA) and related matters. Features of Warehousing (Development and Regulation) Act, 2007;

a) Regulation of warehousing business;
b) Accreditation and Registration of warehouses;
c) Special Provisions for Registration of warehouses of Primary Agricultural Cooperative Societies (PACSs);
d) Introduction of Negotiable Warehouse Receipts System in cold storages;
e) Notification of Agricultural Commodities; and
f) Addressing Concerns of Stakeholders.

ii. Special Economic Zones Act, 2005 (‘SEZ Act’) provides for:

a) the procedure for establishment of a Special Economic Zone which includes a Free Trade and Warehousing Zone;
b) Exemption from taxes, duties or cess as mentioned in the First Schedule to a Unit in an SEZ or a Developer for any goods or services exported out of, imported into, or procured from a Domestic Tarif Area;
c) Special fiscal provisions for Special Economic Zones.

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