presentation - electronic data interchange

FROMPrepared By :

Ashish Gunwal (12810017)

Ashish Aggarwal (12810018)

Kaushik Dutta

(12810043)

Siddharth Dikshit

(12810078)

Sharad Srivastava

(12810076)

and its importance in Indian

Scenario

INTRODUCTION

Definition

EDI (Electronic data interchange) is electronic exchange of business data/ documents between two organisations using pre-defined transaction formats

Constituents of EDI process

Hardware

Software

Standards

HISTORY

In 1968, the transportation industry recognized that the abundance of paperwork was beginning to present a problem

Transportation Data Committee (TDCC),is formed to develop standard formats for exchanging business information electronically

But, all the standards that were developed at this time supported only transportation related issues

In 1978, The American National Standards Institute (ANSI) used the pioneering work of TDCC to charter a committee known as the ASC (Accredited Standard Committee) X12

The main objective was to develop uniform standards for inter-industry electronic interchange of business transactions

In 1983, ANSI published the first five American National Standards for EDI.

Using X12 standards, users ran into problems when communicating electronically outside of their national boundaries

In 1988, the United Nations chartered

UN/EDIFACT (Electronic Data Interchange

For Administration, Commerce and Trade) to

develop international EDI standards

These standards take the form of United

Nations Standard Messages (UNSMs), which

are analogous to what ANSI X12 calls

Transaction Sets

Users involved in EDI will reap various

benefits: overseas expansion, expense

control, and the elimination of support for

multiple formats

EXAMPLE OF EDI

EDI- HARDWARE AND SOFTWARE

EDI Hardware Requirements

Messaging Server

Security protocol implementation

EDI Software

Option 1: Readymade EDI Solutions

Follows global standards and templates

Industry specific solutions

Common platform for multi-partner interaction

Not customisable and dependence on vendor

Option 2 : Custom built solutions

Can be integrated with existing backend applications

Flexibility of enhancements

EDI STANDARDS

Definition

A set of rules, agreed upon, accepted, and adhered to by two entities, through which data is structured into electronic formats for exchange of information

Common standards requirements

Compatible hardware and software

Agreed data exchange templates

Common standards

ANSI X12 is the standard that any industry can use

United Nations/EDI For Administration Commerce and Trade

(UN/EDIFACT) is the standard for international EDI transactions

EDI LAYERED ARCHITECTURE

INFORMATION FLOW WITHOUT EDI

INFORMATION FLOW WITH EDI

EDI BENEFITS

Cost Reduction

Manpower, communications, resources, storage

Speed

Electronic transfer Vs mail/ courier

Accuracy

Avoids duplicate data entry and error margin

Security

Information less susceptible to interception/ falsification

System Integration

EDI can be integrated with internal system to push & pull data

EDI ISSUES

Initial and operative costs

Need to share master data with external

partners

Security concerns

Confidentiality of information

Authenticity of information

Requires continuous maintenance and

resources

EDI APPLICATIONS IN BUSINESS

Four different scenarios in industries that

use

EDI extensively:

International or cross-border trade

Electronic funds transfer

Health care EDI for insurance claims

processing

Manufacturing & retail procurement

MINISTRY OF COMMERCE OF INDIA

THE MINISTRY OF COMMERCE

The Ministry of Commerce and Industry

administers two departments, the Department

of Commerce and the Department of Industrial

Policy & Promotion. The head of the Ministry is

a Minister of Cabinet rank. The incumbent

Minister of Commerce and Industry is Anand

Sharma, who has held the post since 22 May

2009 and is assisted by Minister of State for

Commerce & Industry Sudarsana

Natchiappan

VISION AND MISSION The basic role of the Department of Commerce is to facilitate

creation of an enabling environment and infrastructure for accelerated growth of exports. The mandate is regulation, development and promotion of India’s international trade and commerce through formulation of appropriate international trade & commercial policy and implementation of the various provisions thereof.

The Department formulates, implements and monitors the Foreign Trade Policy (FTP) which provides the basic framework of policy and strategy to be followed for promoting exports and trade. The Trade Policy is periodically reviewed to incorporate changes necessary to take care of emerging economic scenarios both in the domestic and international economy.

Besides, the Department is also entrusted with responsibilities relating to multilateral and bilateral commercial relations, Special Economic Zones, State trading, export promotion and trade facilitation, and development and regulation of certain export oriented industries and commodities.

VISION AND MISSION

The long-term vision of the Department is to make India a major player in the world trade by 2020 and assuming a role of leadership in the international trade organizations, commensurate with India’s growing economy.

The policy tools being adopted in this context are contained in the Strategy Paper focussing on the targeted commodity and country-wise strategy in the medium term and the Strategic Plan / vision and the Foreign Trade Policy in the long run.

THE DEPARTMENT OF COMMERCE

Administrative and General Division

Finance Division

Economic Division

Trade Policy Division

Foreign Trade Territorial Division

State Trading & Infrastructure Division

Supply Division

Plantation Division

ADMINISTRATIVE CONTROL

International trade

Foreign Trade

State trading

Management of Indian Trade Services

Special Economic Zones

PERFORMANCE: EXPORT

During the period, Products which have recorded

good rates of Export growth (in $ terms) are

Agriculture & Allied Products (27.5%) of which

growth rate of Guargum Meal was (138.65%),

Meat & Preparations (11.84%) and Poultry & Dairy

Products (73.46%), Drugs, Pharmaceuticals &

Fine Chemicals (11.34%), Carpets (16.15%),

Petroleum Products (4.57%) and Machinery &

Instruments (3.53%).

PERFORMANCE: IMPORT

During the period, Products which have shown

high rates of Import growth (in $ terms) are

Petroleum Products (11.80%), Pulses

(25.97%), Vegetable Oil (19.92%), Organic

Chemical (7.75%), Artificial Resins (15.14%)

and Manufacture of Metals (3.35%).

TRADE FIGURES

TRADE IN INDIA

EDI IN DEPARTMENT OF COMMERCE

The government of India has established an EDI councilunder the Ministry of Commerce as the nodal agency forimplementation of EDI in India.

It is the apex body with representation from several keygovernment departments and representatives from tradeand industry.

The chairman of EC/EDI council is Secretary, Departmentof Commerce.

The council is responsible for laying down policyframework and directions.

CONTD.

Organisations like All India Management Association(AIMA), Federation of Indian Export Organisation(FIEO), Indian Institute of Foreign Trade (IIFT) andNational Informatics Centre (NIC) conduct trainingprograms for bringing out awareness about EDI.

Besides two government networks i.e. VSNL of DoTand NICENET of NIC, there are also a number ofprivate sector EDI service provider in the countrysuch as Mahindra Network Services, Global TelecomServices Ltd., Satyam Infoway Network, ManipalControl Data , IBM Global Network Services, GEInformation Services.

CONTD.

DGCI&S receives the basic data from different customsformations and SEZs in the form of DTR (Daily TradeReturn) and then processes and compiles it usingstate-of-the-art technology. The Customs Authoritytransmits these DTRs in three different modes, namely,Electronic Data Interchange (EDI), Non-EDI andManual. The EDI data is transmitted on-line throughIndian Customs EDI Gateway (ICEGATE) while theNon-EDI data is transmitted either through e-mail orCD and the rest through manually typed/ handwrittenformat.

While the EDI data is received on a daily basis fromICEGATE, the non-EDI/ manual ports send data on amonthly basis. Data from most of the SEZs is beingreceived through NSDL by e-mail on a monthly basis.

WHY EDI IN DOC?

Infrastructure poses a very important constraint

Transaction costs need to be substantially reduced

Implementation of robust contract labour policy needed

Substantial investment in R&D required in various sectors. Fiscal incentives required for export oriented R&D investment

Technology upgradation important in various sectors

Shortage of skilled personnel/manpower is an emerging concern in many sectors. This in spite of the ‘population dividend’

Import duty on certain inputs needs to be reduced

IMPLEMENTATION

Regulatory Organization Sector

Finance Sector

Transport Sector

Air Sector

Legal Sectors

E-COMMERCE IN INDIA

INTRODUCTION

Electronic commerce (or e-commerce) encompasses all business conducted by

means of computer networks.

STAKEHOLDERS

3 main flows in e-commerce

HOW THE MARKET EVOLVED IN INDIA

First wave: advent of online Naukri and Shaadi

Second wave: Online travel, Online retail

E-COMMERCE MARKET SIZE IN INDIA

India’s consumer-facing e-Commerce market (B2C-C2C) grew at a whopping

CAGR of 49.1% from 2007 to 2011 to reach a market size of US$9.9 billion.

On the other hand, the B2B market is a small contributor to the overall domestic

e-Commerce market, and it was estimated at US$50.37 million in 2011.

FIRST TO SECOND WAVE: FUNDAMENTAL ENABLERS FALLING

IN PLACE

INTERNET PENETRATION IN INDIA

Internet penetration in India was 11.4% as of June 2012, one of the lowest

worldwide.

PAYMENT LANDSCAPE

The number of cards per capita in India is a mere 0.2 and is among the

lowest in the world.

CHALLENGES FOR E-COMMERCE

SECTORe-Commerce laws in India

There are no specific e-Commerce laws in India. The sector is governed by the IT Act 2000, which regulates the legal obligations of sellers and buyers of goods and services in cyberspace.

e-Commerce companies also need to comply with banking and financial laws, where applicable.

The lack of law firms or lawyers specializing in e-Commerce laws compounds the problem.

Low entry barriers leading to reduced competitive advantages

The rapid growth of the e-Commerce sector is attracting new players. The initial investment required to start an online venture is as low as a US$10,000–20,000.

This enables new companies to easily replicate the existing business models and, thereby, increases competition in the sector

CHALLENGES FOR E-COMMERCE SECTOR

Urban phenomenon

India’s e-Commerce market is mainly restricted to urban areas, with the bulk of

the business being restricted to cities. Internet usage in rural areas is limited.

This could be due to several reasons including low internet speed and internet

user base (20 million out of a total of 121 million in 2011), though rural areas

account for 70% of the country’s population.

Customer loyalty

e-Commerce players offer huge discounts to lure people to shop online.

However, since Indian consumer looks for the lowest price before making a

purchase, the cost of customer acquisition is high for these companies.

Moreover, since a large number of players offer the same products at the same

prices, switching cost is non-existent. Consequently, a customer’s lifetime value

is low. This poses a challenge for players in their effort to develop sound

strategies to attract and

generate repeat customers.

EDI IN INDIA

The government of India has established an EDI council under the

Ministry of Commerce as the nodal agency for implementation of EDI in

India.

It is the apex body with representation from several key government

departments and representatives from trade and industry.

The chairman of EC/EDI council is Secretary, Department of Commerce.

The council is responsible for laying down policy framework and

directions.

Organisations like All India Management Association (AIMA), Federation

of Indian Export Organisation (FIEO), Indian Institute of Foreign Trade

(IIFT) and National Informatics Centre (NIC) conduct training programs

for bringing out awareness about EDI.

Besides two government networks i.e. VSNL of DoT and NICENET of

NIC, there are also a number of private sector EDI service provider in

the country such as Mahindra Network Services, Global Telecom

Services Ltd., Satyam Infoway Network, Manipal Control Data , IBM

Global Network Services, GE Information Services.

EDI IN INDIA (CONTD..)

EC

/ED

I C

ou

ncil

EC/EDI COUNCIL

Promotion and propagation of EDI and Electronic

Commerce

Creating awareness and education among the

potential EC/EDI functionaries and users

Streamlining procedures and practices

Attending to legal issues

Human resource development

Any other issue connected with EDI and Electronic

Commerce

INDIA EDIFACT COMMITTEE

The India EDIFACT (EDI For Administration, Commerce and Transport)

Committee and the EDI Working Group were created by Ministry of Commerce

for directing the task of promoting EDI in the country.

The council formally adopted UN/EDIFACT message as the standard of

conducting EDI in country.

India EDIFACT committee is chairman my Additional Secretary at Department of

Commerce.

The India EDIFACT Committee (IEC) is responsible for formulating standards,

streamlining the procedures in line with UN/EDIFACT and maintain liaison with

UN/EDIFACT bodies.

The working group is responsible for motivating various functionaries in the

government and ensure scheduled implementation of program.

To address all the information needed on different sectors and its interface

with UN/EDIFACT standards following Message Development Groups

are working :–

Ports Message Development Group under Indian Ports Association

(IPA)

Airports Message Development Group under Airports Authority of

India (AAI)

Financial Message Development Group under Indian Banks

Association (IBA)

Customs Message Development Group under Central Board of

Excise & Custom (CBEC)

Private Sector Message Development Group under Federation of

Indian Export Organisations (FIEO)

INDIA EDIFACT COMMITTEE (CONTD..)

CO-ORDINATED EC/EDI PROJECT

To facilitate international trade a co-ordinated EC/EDI implementation

project is underway in following departments/organisations :-

Customs Reserve Bank of India (RBI)

Directorate General of Foreign Trade

(DGFT)

Scheduled Banks

Apparel Export Promotion

Council/Cotton & Textile Export

Promotion Council etc.

Airlines

Port Trusts Indian Railways

Airport Authority of India (AAI) CHA/Freight Forwarders

Container Corporation of India

(CONCOR)

Export Promotion Organisation

REGULATORY ORGANIZATION SECTOR

Customs:

Two important areas identified for EDI implementation caters toelectronic filing and processing of documents related to exportand import clearances.

The system to facilitate electronic filing of shipping bill and bill ofentry etc., documents by the individual/agents to Customs alongwith electronic interface with the community partners formessage exchange.

The community partners for customs system are broadly Banks,Airlines, Airport Authority of India (AAI), AEPC, Sea Ports,TEXPROCIL, DGFT etc.

The information/data sharing with the community partner to takeplace electronically and the messages need to confirm to theEDIFACT standards adopted by the country.

The manual submission of GR-1 form to be replaced by theelectronic copy.

DGFT:

There are 32 DGFT Zonal/Regional Offices scattered throughout the

country.

The EDI implementation in DGFT would facilitate electronic

submission and processing of licensing and other applications in the

office of DGFT.

The community partner for EDI implementation in DGFT are broadly

exporter/importer, export promotion organisation, Customs, Banks,

RBI etc.

The licensing details would be shared between DGFT and Customs

whereas the shipment details against the licences be shared

between customs and DGFT.

REGULATORY ORGANIZATION SECTOR

AEPC/TEXPROCIL:

There are thirteen offices of AEPC & TEXPROCIL each scatteredthroughout the country.

EDI based processing is proposed to be implemented. The systemwould facilitate electronic sharing of information between thecommunity partners specially related to the quota management andclearances of shipping documents confirming to quota requirements.

It is expected that the system would facilitate electronic filing of theshipping documents by the user, endorsement of quota clearanceson the shipping documents by AEPC/TEXPROCIL and its sharingwith customs electronically.

It is also expected that the quota clearances information would alsobe electronically shared between AEPC and US customs under theElectronics Visa (ELVIS) system whereas with European Unionunder Import Licensing System (SIGL).

REGULATORY ORGANIZATION SECTOR

Central Excise:

The EDI based processing would be induced into the functioning of

Central Excise especially with respect to the documents facilitating

clearances of export/import consignments.

REGULATORY ORGANIZATION SECTOR

Banks:

The banks would introduce EDI based processing into their

functioning which would facilitate inter-bank and intra-bank

transactions in electronic media as well as user interface for

electronic clearances/payments. This system would create an

environment for electronic payment/receipts by the banks.

FINANCIAL SECTOR

Sea Ports:

There are eleven Ports (Calcutta, Chennai, Cochin, Tuticorin,

Mumbai, JNPT, Goa, New Mangalore, Vizag, Kandla and Paradip)

which are required to implement EDI based processing. However,

during the first phase six container handling ports were taken up.

These ports are Calcutta, Chennai, Cochin, Tuticorin, Mumbai and

JNPT. Remaining Ports have initiated study and development

exercise.

The system would facilitate electronic submission/sharing of all

types of documents with the community partners. The community

partners in this case are Shipping-line, Customs, Agents, Banks,

CONCOR, Railways etc.

It is expected that the EDI based documents handling will also

induce efficiency into the functioning of the Ports. The documents

related to the goods being transported by ship can be shared with

the Ports in EDI mode well in advance i.e. before the ships calls on

the Port.

The interface with CONCOR and Indian Railways would facilitate

effective movement of containers/goods from, to Ports.

TRANSPORT SECTOR

CONCOR:

The EDI implementation in CONCOR would facilitate effective

and efficient handling of container related documents between

CONCOR and its community partners. The community partners

in this case would broadly be Ports, ICDs, Agents, Banks, Indian

Railways etc. The system would facilitate efficient handling,

management and tracking of containers by CONCOR and

related organisations.

TRANSPORT SECTOR

Indian Railways:

Indian Railways would automate their Freight movement systemso that a integrated system of cargo movement can take placebetween all the community partners of Indian Railways. Thecommunity partners in this case are Ports, CONCOR, Agentsetc. The containers from Ports to ICDs through CONCOR andIndian Railways would be effectively traced and tracked if asuitable EDI based system gets into position.

AAI:

The AAI would facilitate EDI based cargo handling system in itsfunctioning by all the offices of AAI. The system, in addition toadoption of tracing and tracking of cargo in AAI as part of the totalautomation, will facilitate EDI based linkages with trading partners.These, in turn, would handle IGM and EGM informationelectronically. The EDI based interface with Customs, Airlines,Agents etc.., would be implemented by AAI as part of the EDIimplementation.

AIR SECTOR

Airlines:

The airlines and its community partners like Customs, AAI,

Agents etc.., can effectively share the IGM, EGM and other

related information for speedy clearances of import and export

consignments.

PROCESS REENGINEERING

With the advent of EC/EDI in India, the focus turned towards process

re-engineering as most Government departments and public

enterprises tend to continue with cumbersome procedures,

enormous documentation and complex rules that caused delays. A

process re-engineering committee was constituted which has

submitted its report for streamlining the processes leading to

effective and efficient information flow between Customs, AAI, Ports,

DGFT and their associated agencies. The report is being

implemented by the concerned departments.

LEGAL ISSUES

For the promotion and development of EC/EDI it is necessary to have an

institutional arrangement for recognition of electronically transacted

documents as a valid instrument in Court of Law. This calls for various

related issues of authentication of electronic transaction, computer

crime, digital signature, creation of certification authority etc., to be

handled.

In order to handle these issues an inter-ministerial committee under the

Department of Commerce has gone into the details of the legal issues,

which need to be addressed for electronic commerce and the

amendments required in the various India Acts for the admissibility of

EC/EDI documents in the court of Law.

The group submitted its report to Ministry of Law. The final report (called

IT Bill’99) prepared by Legislative Department after integrating this and

the initiative of Department of Electronics (now called MIT) was

presented to the Parliament for approval.

LEGAL ISSUES

Information Technology Act, 2000 was passed in May, 2000. It has become

applicable from 17th October, 2000.

The Act provides legal recognition for transactions carried out by means of

electronic data interchange and other means of electronic communication,

commonly referred to as "electronic commerce", which involve the use of

alternatives to paper-based methods of communication and storage of

information, to facilitate electronic filing of documents with the Government

agencies and further to amend the Indian Penal Code, the Indian Evidence Act,

1872, the Bankers' Books Evidence Act, 1891 and the Reserve Bank of India

Act, 1934 and for matters connected therewith or incidental thereto.

It covers Digital Signature, E-Governance, Attribution, Acknowledgement And

Dispatch Of Electronic Records, Secure Electronic Records And Secure Digital

Signatures, Regulation Of Certifying Authorities, Digital Signature Certificates,

Duties Of Subscribers, Penalties And Adjudication, The Cyber Regulations

Appellate Tribunal, Offences etc.

NATIONAL STANDARDS IN EDI

EDIFACT standards for EDI implementation

EANCOM for commercial transactions

EAN International codes for bar coding

- All the regulatory and facilitator organizations implementing

EC/EDI are working towards standardization of messages

being exchanged between organizations as well as with the

user community. Following standards have been declared

as national standard for India

EDUCATION AND AWARENESS

EDICOM’96

30th Oct., 1996 – 1st Nov., 1996

New Delhi

EDICON’98 – ‘Trade facilitation thru Electronic Commerce’

28th - 30th May, 1998

New Delhi

EDICON’99 - ‘Electronic Commerce - A window for new millennium’

11th - 12th Nov., 1999

Mumbai.

- Ministry of Commerce also organizes EDICON (An international

conference and exhibition on Trade Facilitation (TF/EC/EDI) every year

along with special session for CEOs of top Indian companies.

ISSUES PERTAINING TO EDI IN INDIA

Private Company’s Overview Limited solution options

Inability to trade with their entire business community or meet compliance requirements

Low quality of services and high costs

Limited or poor customer service

The companies which are already using EDI services are facing many challengesrelated to the management of their EDI application.

Expensive solutions that are not cost-effective for their situation

Technology requirements beyond their capabilities

Limited support or implementation

Inability to meet trading partner needs

ISSUES PERTAINING TO EDI IN INDIA

Government’s Overview

Case Study 1 - EU-India Maritime Transport Project (Making EDI Work in India)

Don’t leave it to the technologists! Get involved!

What is EDI?

Who communicates with whom?

Change Management

Education and Training

Insecurity

Acceptability

CASE STUDY – 2

Department of Health and Human Services -

OFFICE OF INSPECTOR GENERAL (USA)

CHALLENGES PERTAINING TO EDI (GENERAL)

Lack of top management support

Negative staff attitude

Inadequate IT staff training and inadequate non IT staff training

Lack of trust of other EDI partners

Lack of flexibility

Lack of maintainability

Lack of awareness of benefits of EDI

MITIGATION STRATEGIES

Establish dialogue between all parties involved to discern EDI implementation

strategies and timelines long before EDI implementation.

Joint planning and system specification that will facilitate the process of EDI

implementation and application.

Provide EDI education and help to the trading partners to increase the number

of trading partners and the speed with which trading partners comply.

User participation in planning, analysis, design, construction, and installation is

also necessary for EDI project success.

Encouragement of the constant evaluation, continuous improvement, and

ongoing exploration of new opportunities for EDI among all stakeholders is very

important.

Change Management

Risk Mitigation Strategies

Disaster Recovery Plan

Proper Documentation of Key Learnings/Findings

GENERIC BENEFITS

EDI and other similar technologies save a company money by providing an alternative to, or replacing, information flows that require a great deal of human interaction and paper documents.

EDI and similar technologies allow a company to take advantage of the benefits of storing and manipulating data electronically without the cost of manual entry.

Reduced errors, such as shipping and billing errors, because EDI eliminates the need to rekey documents on the destination side.

Speed in which the trading partner receives and incorporates the information into their system thus greatly reducing cycle times.

EDI can be an important component of just-in-time production systems.

Implementing inexpensive "rip and read" solutions, where the EDI format is printed out in human readable form.

For Governments - Cost efficiency, Increased speed, Improved accuracy, Better logistics management and increased productivity, Transparency, Better Value to Taxpayers money and increased Social Good.

CONCLUSION

India being pioneer most countries to adopt EDI (early adoption)

General and widespread acceptance

Innovation and Updations

Migration from Manual to Electronic

Rules and Regulatory Framework from supportive Governments to enable EDI migration and structured Framework environment

Emergence of multiple EDI service providers

Emergence and acceptability for VANs (Value added Networks)

IT Revolution

Open (Web) enabled EDI (Cloud based and Mobile)

Continuous efforts for Change Management through Education, Training, Shows, Conferences and Workshops etc.

Enroute to become World Leaders in EDI Transactions

Effort to make 100% Digital Transactions by 2030 and make complete GDP activities through EDI route.

QUERIES?????????