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Chapter – 8

Role of Central Warehousing Corporation

and It’s Working in Central Region

1. Introduction 1: Central Warehousing Corporation (CWC) is a Customer Sector Enterprise

under the administrative Control of the Ministry of Agricultural, Food,

Consumer Affairs and Customer Distribution of Government of India,

established on 21st March, 1957, operates under the Warehousing Corporation

Act, 1962 and ISO-9002 & ISO-14001. The Government of India holds over

55 percent stake in CWC, of which the State Bank of India is a major

shareholder with 21 percent equity. CWC is providing logistics support to the

industrial and agricultural sector is one of the biggest customer warehouse

operators in the country offering services to a diverse group of clients. Its

corporate Office is located at New Delhi and 17 Regional offices located in 16

states of the Country.

CWC is operating 484 Warehouses across the country providing warehousing

services for a wide range of products ranging from agricultural products to

sophisticated industrial products. Warehousing activities of CWC include

foodgrain warehouses, industrial warehouses, Custom Bonded Warehouses,

Container Freight Stations, Inland Container/clearance Depots and Air Cargo

Complexes.

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Further, CWC also operates 95 Custom Bonded Warehouses. The concept of

Custom Bonded Warehousing has been promoted with a view to facilitate

deferred payment of Customs duty to encourage entrepreneurs and export

oriented units to carry out their operations with least investment. These Bonded

Warehouses are located all over the country at places well connected with the

port towns for smooth movement of goods to and from the discharge points.

It had envisaged the problems of the movement of imported and exported

goods to and from the port towns and transcended the hurdles by developing an

extensive infrastructure of Container Freight Station (CFS) and Inland

Container/Clearance Depots (ICD) throughout the Country. CWC has

engineered the CFS revolution in India by setting up the first Dry Port of the

Country at Patparganj in Delhi, way back in 1985 and CFS at Adalaj in Gujarat

in 1990. Presently it operates 34 CFSs/ICDs where composite services for

containerized movement of import/export cargo are provided.

CWC2 is playing vital role in operating ICDs/CFSs apart from Container

Corporation of India Ltd (CONCOR) in India. There is proper co-ordination

between CWC and CONCOR for smooth flow of cargo between CFSs and

others managed by different agencies. The CFS at Dronagiri and at Kalamboli

are handling exports and imports on Mumbai – Pune Highway and also

manages import warehouse near Jawaharlal Nehru Port are both managed by

CWC. It may be noted that CWC and Punjab State Warehousing Corporation

(PSWC) have jointly set up a CFS linked to the ICD at Ludhiana.

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2. Services:

Apart from above mentioned facilities CWC provides the following Services

under one roof at their CFSs/ICDs.

1) Handling and Transport facilities: Handling and transport facilities

are provided to depositors at their request on actual plus nominal

supervision charges.

2) Port Handling: Port handling includes stevedoring, clearance,

handling, transport, distribution and storage of import/export cargo.

3) Sale and distribution facilities: Sale and distribution facilities are

provided to the general depositors, Government and Government

sponsored organizations and registered companies.

4) Orderly Marketing: Orderly Marketing includes facilities through

handling, grading, storage and distribution of commodities on behalf of

import marketing and consumer centres.

5) Insurance of Stock: Which keeps the depositor indemnified against

loss or damages due to fire, floods and burglary.

6) Disinfestations Extension Services (Pest Control): These services

include following factors,

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a) At the doorstep of farmers, traders, co-operatives and

Government organizations at economic rates.

b) Recognized as a fumigation agency for exportable

commodities like de-oiled rice bran etc.

c) Arranging ship fumigation

d) Arranging aircraft fumigation

7) Farmers’ Extension Service (FES): Farmers’ Extension Service is

provided to educate farmers in techniques of proper storage and gives

benefits of customer warehousing.

8) Expert Advice and Training on Storage Problems: Expert Advice

and Training on Storage Problems is also a part of services which

extends the knowledge of handling and storage of over 250

commodities and facilities to training personnel.

9) Consultancy Services: Consultancy Services include preparation of

projects and techno economic feasibility reports in respect of all aspects

of warehousing facilities.

10) Credit Facilities: CWC provides credit facilities through pledge of

negotiable Warehouse Receipts with banks.

11) Cold/Air Conditioned Storage: Cold/Air conditioned facilities for

perishables like fruits, vegetables, dairy products, shellac, drugs and

pharmaceuticals are also provided at CWC.

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12) Special storage for hygroscopic commodities: Ideal conditions for

storage of jaggery (gur), spices, tamarind, etc. are also made available.

13) Free Trade Zone Warehouse: Provision of warehousing facilities to

the export – oriented industries in the free Trade Zones is one of the

CWC’s services.

14) CWC’s services also include receipt of Export cargo, In-house

Customs Examination, Export cargo aggregation and storage, Cargo

Stuffing under Customs Supervision for Exports and movement of

Import containers from the Port, De-stuffing of Less than Container

Load (LCL) & Full Container Load (FCL) containers, Custom

Examination for Imports.

Ambitious expansion of CWC over the years has also brought CWC in the

operation of Air Cargo Complexes which is a major step towards providing

complete services as a Multimodal transport operator. Presently, CWC is

operating 2 Air Cargo Complexes at the International Air Ports of Amritsar and

Goa besides managing the accompanied/mishandled cargo warehouse at Indira

Gandhi International Air Port at New Delhi.

Thus, there are different services being provided by the CWC across the

Country except Railway transportation which is with Container Corporation of

India Ltd, which is working under Ministry of Railways. Moreover, CONCOR

failed to keep up the pace of increased container traffic. With India’s container

traffic swelling in recent years, the railways decided CWC3 to foray into

container transportation by rail.

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The Railways4 has agreed to form an alliance with the Central Warehousing

Corporation under which the latter will be setting up rail – side warehouses or

logistics terminals at 22 locations owned by the Railways. The memorandum

of understanding (MoU) to this effect is likely to be signed by both parties

shortly as Railway Ministry declared.

The CWC has committed to investing over Rs.100 crores to create this

infrastructure which makes door to door delivery of goods possible through

railway transportation just as in the case of roads. The land for the purpose has

been given to CWC by the railways on a 30 years lease basis in addition to

lease rental of Rs. 1 per square meter per annum, the railways will also receive

5 per cent of the gross revenue from CWC’s warehousing operations from the

third year of the agreement, subject to the minimum six per cent of the market

value of the land leased to CWC.

Based on this agreement5, CWC is planning to set up 22 rail warehousing

complexes in next 4 - 5 years to manage the increasing business demand of the

trade for logistics and ancillary services.

CWC has also worked as an agent for import6 of vanaspati (Vegetable Fats)

from Nepal. The Director General of Foreign Trade (DGFT) had originally, on

April 30, 2002, notified CWC as the sole chanalizing agency for import up to

one lakh tones of vanaspati a year from Nepal under the annual tariff rate quota

regime (TRQ). The TRQ was instituted as part of the India-Nepal Treaty of

Trade. Vanaspati imports from Nepal are allowed at Zero basic Customs duty

under the TRQ.

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Under, the TRQ regime, while vanaspati imports of up to one lakh tones per

year do not fetch any duty, including the four percent special additional custom

duty (SACD), quantities above this level are subjected to the normal most

favoured nation (MFN) duty i.e. 25 percent basic plus 4 percent SACD. In a

subsequent Customer Notice, dated June 6, 2003, the government also

appointed the State Trading Corporation (STC) as a chanalizing agency in

addition to CWC as an additional chanalizing agency to ease the import of

vanaspati from Nepal.

In latest development, The Directorate General of Foreign Trade (DGFT) has

divested the Central Warehousing Corporation (CWC) its role as an agent to

import vanaspati from Nepal. Thus, the State Trading Corporation (STC) has

become the sole agency by latest Customer Notice, dated October 23, 2003.

The DGFT has ruled that in future “STC shall be the sole agency to make

imports of vanaspati up to the indicated quantity of annual quota. It is so

happened due to the behest of the domestic industries, which had complained

that vanaspati routed through CWC was not being evenly distributed

throughout the Country.

CWC has finalised Memorandum of Understanding (MoU) with Kandla Port

Trust7 on 12th February, 2002 to provide the state of the art CFS facility outside

the Port. Accordingly, a circular No. TF/SH/2118 (CWC)/08 dated 1st Sept.

2004 was issued regarding stoppage of stuffing/de-stuffing and Customs

examination of containers in the Port area w.e.f. sept,16th 2004.

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The impact of disinvestment policy of Government of India is also seen on

CWC. CWC operates various activities at their CFSs/ICDs across the country

as explained earlier, the disinvestment commission8 has recommended splitting

of CWC into 20 companies prior to its privatization.

The Commission’s report also contains transfer of assets and liabilities of

CWC and State Warehousing Corporations (SWCs) to newly-formed

companies, following which the entire government equity in two companies

dealing with general and port warehousing could be disinvested in favor of

strategic partners. As for the third company which would deal with food grains,

as per the commission, any decision on privatization should be taken within

three years, in line with the progress of the private sector participation in the

sector, growth of private sector warehouses and the setting up of a regulatory

framework. The commission also wanted the Warehousing Corporation Act,

1962, to be repealed.

3. Working of CWC in Central Region:

Central Warehousing Corporation has started its operations from 15th June,

1998 at Waluj, Aurangabad. Waluj is the major industrial Area set by

Maharashtra Industrial Development Corporation (MIDC) of Maharashtra state

serving big corporate viz. Bajaj Auto Ltd., Cosmo Films Ltd., M/s Garware

Polyesters Ltd., Tyre industries, Mat Industries etc. Aurangabad is also a

leading industrial area in India, there is an immense scope for international and

domestic trade for CWC.

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This is the only Inland Container Depot (ICD) comes under Central Region of

Container Corporation of India Ltd (CONCOR) and in competition with

CONCOR at Aurangabad. Trade of Aurangabad is enjoying services of two

ICDs at Aurangabad, CONCOR is providing the Rail, Road, Warehousing,

Custom clearance etc facilities at their ICD whereas CWC is supporting to

logistics activities, extends custom Clearance under different Export Promotion

Schemes.

CWC provides export/import clearance facility at Inland Container Depot

(ICD) at Aurangabad and is providing warehousing of 1788 Square Meters of

Bonded and General Warehouse supported by logistics services. Currently,

there is no handling contractor outsourced by CWC management at

Aurangabad, which is the major setback for this ICD.

Following EXIM services are available at CWC, Aurangabad,

Exports:

• To export Full container Load (FCL)

• To export Less than Container Load (LCL)

• To export Over dimensional Cargo (ODC) shipment.

• To export under Duty Exemption & Entitlement Certificate (DEEC)

scheme / Duty Entitlement Pass Book (DEPB) scheme and Duty

Drawback scheme.

• To export under various export promotion scheme as per specification

of goods.

• To make Pharmaceutical exports.

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3.2 Imports:

• To import Full Container Load

• To Bond & Ex-bond import

• To re-export

• To import including various Govt. schemes including Export Promotion

Capital Goods (EPCG)

• To import under DEEC/DEPB schemes

3.3 Customs Services:

• Customs services include facility of DEEC logging system and it’s

finalization and verification facility.

• It also facilitates DEPB schemes and it’s verification

• Telegraphic Release Advice (TRA) facility can be availed under DEEC

/DEPB clearances.

• Duty Drawback Scheme is also an additional scheme.

• It also provides EPCG scheme with export obligations

• Pre shipment and post shipment documentation can be arranged from

one place.

• Duty refund claims can be settled amicably.

• There is facility of Bond execution and Bond Clearance

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3.4 Value Added Services:

• CWC provide office space for exporters/importers and users of ICD.

• There is volume based discount facility for exporters/importers. Such

facilities are also extended for CHAs.

• There is facility of insurance coverage for warehoused cargo.

3.5 Equipments:

CWC has deployed one fork lift to carry out the operations for stuffing and

destuffing. Apart from this, they do not have any other equipment with them.

3.6 Weeknesses:

• There is no availability of handling equipment e.g. Cranes, Hydra etc.

• There is no facility of trailers for transportation.

• There is no stuffing facility for exports.

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4. Performance of import containers handled at CWC – Waluj, Aurangabad details in table no. 8.1 as given below Table no.: 8.1

IMPORT CONTAINERS HANDLED AT CWC-AURANGABAD (IN TEUS) BY FIXED BASE METHOD

Sr. No

Year TEUs Fixed Base Growth %

1 1999-2000 48 100 -----

2 2000-01 158 329.17 229.17

3 2001-02 208 433.33 333.33

4 2002-03 146 304.16 204.16

5 2003-04 370 770.83 670.83

6 2004-05 635 1322.92 1222.92

TOTAL: 1565 TEUs

AVERAGE: 261 TEUs PER YEAR (Source: Record of CWC, Aurangabad).

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From table no. 8.1, the highest growth of import was witnessed to 635 TEUs

(an increase of 1222.92%) during the year 2004-05 and the lowest growth was

witnessed from 98 TEUs (i.e. 204.16%) during 2002-03 over the base year of

1999-2000 i.e. 48 TEUs.

It is observed that there was a significant growth trend in the business during

the reference period of 6 years of the study. The throughput during first 4 years

over the base year was found to be less than the annual average of 261 TEUs

handled. While in the latter 2 years from 2003-04 to 2004-05, the throughput

was more than the average TEUs.

This is the clear indication that business growth is there at first instance but not

satisfactory. There is a need to speed up the handling of containers for speedy

growth oriented progress.

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Table no.: 8.2

IMPORT CONTAINERS HANDLED AT CWC-AURANGABAD (IN TEUS) BY CHANGED BASE METHOD

Sr. No

Year TEUs Changed Base Changed Rate

in %

1 1999-2000 48 100 -----

2 2000-01 158 329.17 229.17

3 2001-02 208 131.65 - 197.52

4 2002-03 146 70.19 - 61.46

5 2003-04 370 253.42 183.23

6 2004-05 635 171.62 - 81.80

TOTAL: 1565 TEUs

AVERAGE: 261 TEUs PER YEAR

(Source: Record of CWC, Aurangabad) In order to project the import growth in every successive year over the

previous base year, table no 8.2 details the data by way of changed base

method. It may be noticed that there was decline (-) during each of three years

of the reference period of 6 years over the respective base years, although

during remaining three years there was growth in handling the TEUs.

The maximum rate of decline recorded was 197.52% in 2001-02 as against the

lowest percentage of 61.46% decline in 2002-03. (This is paradoxical result).

This was caused on account of inadequate availability of handling equipment,

transportation facility as per trade’s requirement. Introduction of rail services

by CONCOR at Aurangabad had also affected the business of CWC.

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To improve the import business at CWC-Aurangabad, there is a need to

promote this ICD among most of the shipping lines so that maximum numbers

of imports consignments can be ordered for this ICD.

5. Export Performance at CWC-Aurangabad is given in Table no. 8.3 Table no.: 8.3

EXPORT CONTAINERS HANDLED AT CWC-AURANGABAD (IN TEUS) BY FIXED BASE METHOD

Sr. No

Year TEUs Fixed Base Growth %

1 1999-2000 74 100 -----

2 2000-01 410 554.05 454.05

3 2001-02 314 424.32 324.32

4 2002-03 561 758.11 658.11

5 2003-04 846 1143.24 1043.24

6 2004-05 1936 2616.22 2516.22

TOTAL: 4141 TEUs

AVERAGE: 690 TEUs PER YEAR

(Source: Record of CWC, Aurangabad)

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Table no. 8.3 shows the highest growth of export was 1936 TEUs (an increase

of 2516.22%) during the year 2004-05 and the lowest growth was witnessed

from 240 TEUs (i.e. 324.32%) during 2001-02 over the base year of 1999-

2000 i.e. 74 TEUs.

It is observed that the growth was very slow during the reference period of 6

years of the study. The throughput during first 4 years was found to be less

than the annual average of 690 TEUs handled. While in the latter only two

years 2004-05, throughput was more than the average TEUs.

This is the clear indication that export growth was not satisfactory and there is

need to increase the business. Which is not possible by providing only

“clearance” facility. In view to increase the business, it is recommended that

CWC should deploy modern handling equipment, trailers and space for

handling and stacking of containers at Aurangabad. It is also recommended

that they should attract the business by providing value added services e.g.

collection of transference copies of shipping bills etc.

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Table no.: 8.4

EXPORT CONTAINERS HANDLED AT CWC-AURANGABAD (IN TEUS) BY CHANGED BASE METHOD

Sr. No Year TEUs Changed Base

Changed Rate in %

1 1999-2000 74 100 -----

2 2000-01 410 554.05 454.05

3 2001-02 314 76.58 - 477.47

4 2002-03 561 178.66 102.08

5 2003-04 846 150.80 -27.86

6 2004-05 1936 228.84 78.04

TOTAL: 4141 TEUs AVERAGE: 690 TEUs PER YEAR

(Source: Record of CWC, Aurangabad)

In order to project growth of Export business in every successive year over the

previous base year, table no 8.4 details the data by way of changed base

method. It may be noticed that there was decline (-) during each of two years

of the reference period of 6 years over the respective base years, although the

remaining four years there was growth in handling the TEUs.

The maximum rate of decline was recorded of 477.47% in 2001-02 (this is

paradoxical result) as against the lowest percentage of 27.86% decline in 2003-

04. This was caused on account of inadequate availability of handling

equipment, transportation facility and required services.

In unavailability of adequate services, it is observed that the business at

Aurangabad is deteriorating, which needs to be improved immediately.

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Important observations & recommendations:

Important observations & recommendations regarding this chapter may be

summarized as follow:

1) There is redtapism in the functioning of CWC because it works under

control of Government of India. There are so many procedures and

formalities to carry out the work. The rules and regulations are also rigid

to perform the procedural aspect about decision-making. Therefore, it is

recommeded that the style of working and approach of CWC should be

customer friendly and co-operative. Fast decisions should be taken on

operational and administrative level.

2) CWC supports to International Trade and provides facilities for

clearance of Export/Import consignments from customs and acts as a

custodian of cargo/containers. All supportive facilities Viz.

Stuffing/Destuffing, handling & transportation etc should be provided to

the users of ICDs so that users can arrange fast clearances.

3) Warehousing business is the mainstay of CWC throughout the Country,

which includes bonded warehousing in a view to facilitate deferred

payment of Customs duty to encourage entrepreneurs and export

oriented units to carry out their operations with least investment. There

are various services being provided by CWC including international

trading and distribution. Despite of good network throughout the

country, it is observed that CWC is not competent to handle business

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effectively so it is recommended that business area should be targeted

and effective services should be provided accordingly.

4) It is observed that CWC is in Joint Venture with other Corporations to

provide the state – of - the – art services to facilitate the trade. Joint

Ventures can boost the service areas but basic facilities should be

provided to the users by CWC, which is the major requirement of user

of services.

5) Due to poor distribution system, CWC have resulted in loss of import

business of vanaspati from Nepal. There is a need to improve on

networking system across the country.

6) CWC is handling so many businesses across the Country but

unavailability of adequate infrastructure and modern handling

equipments are the major weaknesses.

7) Unavailability of rail services for transportation is main requirement to

make the logistics system more effective, for this CWC have taken

corrective measure and finalizing the agreement with Railways.

8) It is observed that CWC is handling port containers and facilitates the

clearances outside the port at their CFS because containers clearance is

not allowed inside the port as per government of India (GOI) directives.

It is recommended that in such clearance, CWC should deploy its

modern equipment to enable the fast movement and clearance of

cargo/containers.

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9) It is observed that performance of import is not up to the mark, to

increase import business, there is need to promote maximum numbers of

shipping lines so that imports can order through various shipping lines.

10) It is observed that there is sufficient and satisfactory business at

Aurangabad but handling and transportation facilities are not honored to

this ICD. It is also observed that CWC has not provided any value

added services e.g. collection of transference copies of shipping bills

etc. It is recommended that handling and transportation facilities should

be honored to this ICD immediately and in addition to this as value

added services should also be provided to the users of this ICD.

11) It is observed that there is a need to improve on entire working of CWC

for effective clearances including customer relations aspects so that

problems of users can be sorted out immediately.

12) It is also observed that business promotion policy at CWC is not

properly designed. To promote the business at CFS/ICD location there

is a need to adopt effective business promotions strategies.

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SELECT REFERENCES:

1) Website of CWC

2) Dr. Hariharan K. V. Containerization and Multimodal

Transport in India, Edition: 4th revised

& enlarged edition May’2003, Shroff

Publishers & Distributors Pvt. Ltd.

Mumbai, Pp. 70, 71.

3) Daily Shipping Times

(West Zone) Volume – XLVI No. 43, dated

24.02.2005, Pp. 17.

4) Exim India Newsletter Volume – XIII No. 285 dated

21.12.2004, Pp. 1

5) Daily Shipping Times Volume – XLVI No. 82, dated

(West Zone) 04.04.2005, Pp. 1

6) Exim India Newsletter Volume – XLIV No. 250 dated

30.10.2003, Pp. 40

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7) Daily Shipping Times

(West Zone) Volume– XLV No.291, dated

30.12.2004 Pp. 32

8) Exim India Newsletter Volume – XIV No. 81 dated

12.04.2004, Pp. 1

9) Daily Shipping Times

(West Zone) Volume – XLIV No. 264, dated

27.11.2003, Pp. 27

10) Daily Shipping Times (Journal) Multimodal Logistics 2003 learning

from global Experience Pp.88, 89.

11) Ibid Pp. 18