Blockchain technology is being used by the Indian government to improve its logistics industry, according to the government

Blockchain technology is being used by the Indian government to improve its logistics industry, acco ...

The Indian government has been accustomed to blockchain technology's use to streamline operations and services. Its latest experiment has been in the area of domestic trade.

On Oct. 15, the central board of indirect taxes and customs under the countrys finance ministry launched a pilot electronic cargo tracking system (ECTS) project based on blockchain technology. This aims to provide for secure documentation and GPS-based tracking of containers.

The test run is being carried out at the Inland Container Depot (ICD) of the Tughlakabad Import Commissionerate, which accounts for about 20% of Delhi Customs' total tax revenues.

Once this test run is successful, the initiative may be expanded to India after an evaluation of costs, time savings, and compliances, according to a senior government official.

According to figures from the Airports Authority of India (pdf), the cargo flow at all Indian airports alone stood at 264,509 tonnes in August. The Indian Ports Association stated in a statement that the figure for the year-ago period at the country's major ports was 57.59 million tonnes.

The test run is being conducted in Delhi...for liquor, the official told Quartz. Liquor is a sensitive item, and it changes hands very frequently. It was done in consultation with all stakeholderscustoms, importers, warehouse owners."

All stakeholders have shown a keen interest in the technology, citing the official, because it simplifies record-keeping and management.

How does blockchain technology work in trade?

Analysts believe blockchain technology will ensure a safe and seamless documentation among network participants as all data are recorded digitally.

Sharat Chandra, a Bengaluru-based emerging tech evangelist, stated, All transactions related to consignment flow can be stored on cryptocurrencies with tamper-proof timestempels and unique cryptographic signature. With permission access, information may be accessed at any time during the transit, reducing fraud and revenue leakages, states the organization.

Conventional paper-based systems, despite their risks, pile up paperwork, given the number of approvals involved.

However, such new initiatives may be more secure if the blockchain nodes with each party are on a decentralized server.

A blockchain node is a digital ledger that tracks all cryptocurrency transactions and makes information available to everyone via cellular network. Its main function is to verify each batch of network transactions, also known as blocks.

The finance ministry has partnered with the Asian Development Bank for the initiative at ICD Tughlakabad Import Commissionerate.

Indian banks are jumping onto the blockchain train.

15 Indian banks joined forces earlier this year to form Indian Banks Blockchain Infrastructure Co, a company that would empower blockchain-enabled projects. One of these, which will involve the processing of letters of credit, GST invoices, and e-way bills, will likely be done using Infosyss blockchain-based platform.

According to the 2020 Global Trade Survey report from the International Chamber of Commerce, 54% of banks believe that the global focus is on exploring emerging technologies, digital trade, and online trade platforms to achieve near-term growth.

While technological advancements are being made, document verification is a significant laggard when it comes to removing the use of physical paper, according to the report.

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