Presentation - Electronic Data Interchange

FROM
Prepared 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

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 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

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%).

EDI IN DEPARTMENT OF COMMERCE
 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.

CONTD.
 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.

CONTD.
DGCI&S receives the basic data from different customs
formations and SEZs in the form of DTR (Daily Trade
Return) and then processes and compiles it using
state-of-the-art technology. The Customs Authority
transmits these DTRs in three different modes, namely,
Electronic Data Interchange (EDI), Non-EDI and
Manual. The EDI data is transmitted on-line through
Indian Customs EDI Gateway (ICEGATE) while the
Non-EDI data is transmitted either through e-mail or
CD and the rest through manually typed/ handwritten
format.
While the EDI data is received on a daily basis from
ICEGATE, the non-EDI/ manual ports send data on a
monthly basis. Data from most of the SEZs is being
received 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

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
SECTOR
e-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/EDICouncil
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 to
electronic filing and processing of documents related to export
and import clearances.
 The system to facilitate electronic filing of shipping bill and bill of
entry etc., documents by the individual/agents to Customs along
with electronic interface with the community partners for
message 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 take
place electronically and the messages need to confirm to the
EDIFACT standards adopted by the country.
 The manual submission of GR-1 form to be replaced by the
electronic 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.

AEPC/TEXPROCIL:
 There are thirteen offices of AEPC & TEXPROCIL each scattered
throughout the country.
 EDI based processing is proposed to be implemented. The system
would facilitate electronic sharing of information between the
community partners specially related to the quota management and
clearances of shipping documents confirming to quota requirements.
 It is expected that the system would facilitate electronic filing of the
shipping documents by the user, endorsement of quota clearances
on the shipping documents by AEPC/TEXPROCIL and its sharing
with customs electronically.
 It is also expected that the quota clearances information would also
be electronically shared between AEPC and US customs under the
Electronics Visa (ELVIS) system whereas with European Union
under Import Licensing System (SIGL).

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.

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
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 system
so that a integrated system of cargo movement can take place
between all the community partners of Indian Railways. The
community partners in this case are Ports, CONCOR, Agents
etc. The containers from Ports to ICDs through CONCOR and
Indian Railways would be effectively traced and tracked if a
suitable EDI based system gets into position.

AAI:
 The AAI would facilitate EDI based cargo handling system in its
functioning by all the offices of AAI. The system, in addition to
adoption of tracing and tracking of cargo in AAI as part of the total
automation, will facilitate EDI based linkages with trading partners.
These, in turn, would handle IGM and EGM information
electronically. The EDI based interface with Customs, Airlines,
Agents etc.., would be implemented by AAI as part of the EDI
implementation.
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 challenges
related 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.

Presentation - Electronic Data Interchange

Presentation - Electronic Data Interchange

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