The cost of trade in India is amongst the highest in the world, especially in comparison to other developing countries.
India's transport and logistic costs are at 14.4% of its GDP as compared to China, where these costs are 8%.
A study conducted by Confederation of Indian Industry (CII) and Maersk Group found that indirect and hidden costs in the form of unreliable transport services and bureaucratic delays hike the total logistics cost by 38-47%.
The study, which covered the four key sectors of pharmaceuticals, textiles, electronic, and auto components, revealed a 10% reduction in trade can boost India's competitiveness and contribute an additional revenue $5.5 billion annually.
"Expansion of trade is a key driver of economic growth. While we need timely and cost-effective transportation to support this expansion along with a robust policy, it is also critical to address challenges like inadequate inland infrastructure and indirect and hidden costs", said Rajeeva Sinha, co-chair of CII National Committee on Ports and Shipping.
"The outlook for global trade in 2017 remains weak. Real growth is expected between 1% and 2%. India has the opportunity to improve its share of global trade, especially in exports, through increased competitiveness and be probably the only country to deliver nearly double-digit growth in container trade this year", said Franck Dedenis, Managing Director - India, Bangladesh and Sri Lanka, Maersk Line.
The study recommended development of digital tools for reducing time and red tape around documentation. It said faster clearance of goods and investment in road and rail infrastructure are required to improve inland transportation from ports to inland container depots (ICDs).
The study said India also needs to have unified RFID tags for all-India toll payment.
BW Reporters
Naina Sood is a Economics graduate and has done her post graduation in International economics and Trade. She has deep interests in Indian economy and reforms
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