Steelmaker Tata Steel, along with HSBC, an investment banking firm, has performed a blockchain-enabled paperless trade business of steel export by Tata Steel, India to Universal Tube and Plastic Industries, UAE. According to the firm, this is a global first for the steel industry. The firm's vice-president – Peeyush Gupta, sales & marketing, said in a media that this unique initiative, performed in collaboration with HSBC, illustrates continued efforts to lead tech-led turmoil by challenging the status quo & re-creating the global trade setup.
The end-to-end paperless trade deal performed over the Contour platform was made possible by an exclusive collaboration pivoted by the steel firm across the spectrum over essDOCS & Contour platforms. The Letter of Credit (LC) was proceeded by HSBC UAE for Universal Tube & Plastic Industries, UAE (importer) with HSBC India as the negotiating & advising bank for Tata Steel, India (exporter).
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This transaction certifies blockchain's operational & commercial viability as an option to traditional exchanges for paper-based documentation. The steel firm has also confirmed its intent to search for similar opportunities in other geographies as well. Mr. Gupta added the continuous leverage of their in-house capability & external ecosystem by a carefully curated partnership for advanced innovation. Adopting this platform is in line with the objective of agility & enables a faceless yet trustworthy all-time interface to enhance customer experience.
The Head-Global Banking & Markets of HSBC India - Hitendra Dave, stated, "We are euphoric to form an alliance with Tata Steel. This transaction is a major step towards the mass adoption & commercialization of this tech & we look forward to its transformative influence on trade finance." He added having pioneered blockchain tech deployment in trade finance, the firm is focused on improving its utilization across a broader spectrum of trade-economic transactions.
With digitized trade documents, corporates can minimize the rates associated with tackling paper-based documentation, its settlement & streamline the processing flow.
How Contour Works?
Contour has been built on the blockchain tech, which has enabled comprehensive digitization of throughout Letter of Credit transaction, including the trade document's digital presentation. The platform allows for the basic Letter of Credit trade deal to be digitized entirely from the LC issuance to the document presentations. It also provides transaction parties to present & manage e-Bills of Lading (eB/Ls), transfer & supporting documents within its network through the interface with essDOCS' CargoDocs platform.
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The use of blockchain tech in trade finance allows comprehensive visibility for all involved parties & improved security. Most significantly, it helps to drastically reduce the document negotiation & banking transaction cycle times from weeks to a few days, thereby helping to unlock business working capitals. It also increases the trading velocity, mainly when shipping routes are relatively short.
Eliminating the Obstacles of Close-proximity Trade
Steel firm quoted UAE as India's 3rd massive trade partner. The increased financial collaboration between the two is expected to further boost their bilateral trade. While the physical transfer of goods between UAE & India takes a relatively short turnaround time, the administrative paperwork can delay the delivery. Minimized transaction times will help enhance trade efficiency in the India-UAE corridor categorized by several close proximity shipping routes.
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