Commerce Ministry pushes for better logistics to increase exports

Logistics costs of exports are currently very high in India and due to this Indian goods are less competitive in the global markets.

New Delhi:

Worried over continuous dip in exports, the Commerce Ministry is working on a proposal to enhance the logistics competitiveness of exporters and is discussing it with the railways as well as port authorities.

As part of the proposal, the department of commerce is suggesting to the Railways Ministry that it needs to clearly distinguish between consignments for exports, imports and general in terms of the freight rates, an official said.

It has also suggested to the railways to work on ways to reduce the delivery time of consignments providing to traders more predictability and reliability. Indian exporters time and again demand drastic cuts in freight rates to enhance their price competitiveness in the global markets.

"Logistics costs of exports are currently very high in India and due to this, Indian goods are less competitive in the global markets. Railways should give competitive rates to exporters," the official said, adding that cross-subsidisation between passenger and freight trains is also impacting the railways in terms of transportation.

Citing an example, an industry expert said the time taken for delivery of consignment through Railways from Tughlakabad, in Delhi to Jawaharlal Nehru Port (JNPT) is huge and needs to be reduced to about 36 hours.

In India, the container transport is heavily inclined in favour of roads due to high freight rates of railway, unpredictable and unreliable scheduling of freight trains, and poor last-mile connectivity. The Commerce Ministry is also in consultations with the ports authorities for timely handling of cargo.

Currently, traders have to spend a lot of time in off- loading and on-loading their consignments from ports, impacting the country's trade. FIEO Director General Ajay Sahai said that improvement in port infrastructure would help in reducing transaction costs and boost shipments.

A Commerce Ministry strategy paper released in 2010 had emphasised upon the need to invest billions in improving infrastructure to boost exports. It had asked the government to invest to modernise roads, ports, railways, airports, power and customs stations.

Between December 2014 and May 2016, exports fell for 18 months straight due to weak global demand and slide in oil prices. Shipments witnessed growth only in June this year but entered into the negative zone again in July and August.

To boost shipments of both goods and services, the Commerce Ministry is pressing for better exchange rate policy, alignment of freight rates with global standards and a liberalised visa regime.