As it really works out a nationwide logistics coverage, the commerce & trade ministry is weighing a proposal to roll out an index to gauge the nation’s logistics prices. The transfer assumes significance, as there was no official estimate of logistics prices in India, and one of many key goals of the brand new coverage is to deliver down such prices, which have lengthy been blamed for eroding the nation’s export competitiveness.
“We are actively considering working out a framework for the assessment of logistics costs and also the possibility of having an index, which can help us in the determination of and/or monitoring of logistics costs at any point of time,” a senior official instructed FE.Some personal companies have pegged India’s logistics prices at 13-14% of its gross home product (GDP).But some consultants have raised questions over the methodology utilized by the personal events to reach at such prices, given the fragmented nature and the complicated dynamics of the logistics sector, and opaque pricing fashions adopted by related gamers. However, for these very causes, estimating the precise logistics prices will warrant an elaborate train.
The new coverage will doubtless set an bold goal of decreasing the prices by as much as 5 share factors over the subsequent 5 years. Encouraged by the Centre and acknowledging the rising significance of retaining logistics prices at affordable ranges, eight states have adopted their very own logistics insurance policies.These states are Gujarat, Uttar Pradesh, Haryana, Assam, Telangana, Kerala, Bihar and Chhattisgarh, official sources mentioned. More states are following swimsuit.
An earlier draft of the nationwide logistics coverage, firmed up in 2019, had aimed to cut back such prices to 9-10% of GDP however the ministry had then flagged the absence of an official logistics indicator. The logistics sector in India stays very complicated, with the involvement of greater than 20 authorities companies beneath varied ministries, 40 partnering authorities companies and 37 export promotion councils. They cope with 500 certifications protecting 10,000 commodities.
The renewed thrust on decreasing logistics prices got here after the federal government created the brand new logistics division within the commerce division to develop and coordinate the implementation of an motion plan for the built-in improvement of the logistics sector, by the use of coverage adjustments, enchancment in current procedures, identification of bottlenecks and gaps and introduction of know-how on this sector.
According to a 2016 HSBC report, home bottlenecks, together with excessive logistics prices, accounted for a half of the slowdown within the nation’s exports. The Economic Survey for 2017-18 had estimated {that a} 10% discount in oblique logistics price might result in an export progress of 5-8%.
India improved its rating within the World Bank’s Logistics Performance Index (LPI) from 54 in 2014 to 44 in 2018. However, it trailed nations like Singapore (rank 7), South Korea (25), China (26), Taiwan (27), Thailand (32) and South Africa (33). Also, whereas it has executed comparatively effectively on “tracking and tracing” and “timeliness”, its scores on “customs”, “infrastructure” and “logistics competence” parametres of the LPI had been decrease than its headline LPI rating in 2018.
A customs officers mentioned a number of initiatives have since been taken to enhance the efficiency, which might mirror in future rating.The nation’s street logistics market alone is estimated to develop at a compounded annual progress charge of 8% to achieve $330 billion by 2025, pushed by components, together with a quickly rising e-commerce sector and a rising retail gross sales market, in response to a research by an arm of consulting agency RedSeer.
Source: www.financialexpress.com”