HSBC facilitates first blockchain transaction for steel between UAE, India

HSBC has executed a blockchain-enabled, live trade finance transaction between UAE’s Universal Tubes & Plastic Industries and India’s Tata Steel.

The Contour blockchain platform enabled end-to-end digitisation of the documentation required for Universal Tubes to import its order of flat carbon steel to the UAE from Tata Steel in India. The transaction was the first integrated paperless letter of credit and eDocs transaction for a steel export globally, and the first end-to-end paperless trade combining electronic bills of lading and digitised letter of credit in the steel commodity segment.

Contour’s platform allows parties to have visibility of a trade, while also ensuring that no single organisation controls all data, according banks, importers and exporters improved visibility. The transaction also incorporated essDOCS’ CargoDocs solution, enabling the transfer of the title of goods alongside the letter of credit.

A founding shareholder in Contour, HSBC was the first bank to join the platform as a full production member in December 2020, a statement said.

Sunil Veetil, regional head of global trade and receivables finance (GTRF) at HSBC, Middle East, North Africa and Turkey, said: “We are delighted with Universal Tubes’ and Tata Steel’s decisive action to conduct this trade over Contour, which reinforces the commercial and operational viability of blockchain and the Contour platform. We are confident this will pave the way for widespread adoption by other clients, counterparties and industries, many of whom we are already in talks with.”

Digitisation of the paper-based and manual processes can reduce transaction times from 5-10 days to under 24 hours, unlocking working capital and enabling more trade to be done between countries, the statement added. By using blockchain, the reduced transaction time will boost the efficiency of trade between the two countries, which is valued at around $60bn with the UAE being India’s third largest trading partner.

“The future of trade is digital and the success of this blockchain transaction encourages us to look forward to linking all our future Letter of Credit transactions to this solution,” said Anil Taurani, managing director, Universal Tubes & Plastic Industries Ltd, UAE.

Peeyush Gupta, VP (steel marketing and sales), Tata Steel, added: “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 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.”