The end-to-end paperless trade transaction, executed over the Contour platform was made possible by a unique collaboration pivoted by Tata Steel across the spectrum over the Contour and essDOCS platforms. The Letter of Credit (LC) was issued by HSBC UAE for Universal Tube & Plastic Industries, UAE (importer) with HSBC India as the advising and negotiating bank for Tata Steel, India (exporter).
This transaction validates the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation. Tata Steel has also signalled its intent to explore similar opportunities in other geographies in the future.
Peeyush Gupta, VP (Steel Marketing & Sales), Tata Steel, said: “We continuously leverage our in-house potential and that of the external ecosystems through carefully curated partnerships to drive innovation. Adoption of this platform is in line with our objective of agility and enabling a faceless yet trustworthy all-time interface to better customer experience. This unique initiative, executed in collaboration with HSBC, demonstrates our continued efforts to lead technology led disruptions by challenging the status quo and reimagining the global trade set-up.”
Commenting on the transaction, Hitendra Dave, Head-Global Banking & Markets, HSBC India, said “Having pioneered the deployment of Blockchain technology in trade finance, we are focused on enhancing its utilisation across a wider spectrum of trade finance transactions. We’re delighted to partner with Tata Steel in this landmark transaction for the steel industry. This transaction is a significant step towards the mass commercialisation and adoption of this technology and we look forward to its transformative impact on trade finance.”
How it works
Contour, which has been built on blockchain technology has enabled comprehensive digitisation of the end-to-end Letter of Credit transaction including the e-presentation of trade documents. Contour enables the underlying LC trade transaction to be fully digitised from the LC issuance to the presentation of documents. It also enables transaction parties to transfer, manage and present electronic Bills of Lading (eB/Ls) and supporting documents within its platform via the interface with essDOCS’ CargoDocs platform.
Benefits
With trade documents digitised, corporates can reduce the costs associated with handling paper-based documents, its reconciliation and streamline their processing flow. The use of blockchain technology in trade finance enables comprehensive visibility for all involved parties and enhanced security. Importantly, it helps to significantly reduce the document negotiation and banking transaction cycle times from week(s) to a few days, thereby aiding unlocking of working capital for businesses. It also helps to increase the velocity of trade, particularly in situations where shipping routes are relatively short.
Removing the hurdles of close-proximity trade
UAE is India’s third largest trade partner and increased economic collaboration between the two is expected to further drive up their bilateral trade. While the physical transfer of goods between India and UAE takes a relatively short time, the administrative paperwork can delay their delivery. Reduced transaction times will help boost the efficiency of trade in the India-UAE corridor that is characterised by many close-proximity shipping routes.
