Concerned over continuous decline in exports, the commerce ministry is in talks with the railways and port authorities and is working on a proposal to reduce the logistics costs and improving the competitiveness of exporters. Logistics costs of exports are currently very high in India and due to this Indian goods are less competitive in the global markets. According to the World Bank data, India’s cost to export was as high as $1,332 per container, much higher than $525 in Malasia, $560 in Sri Lanka, $670 in South Korea and $823 in China, mainly due to high logistics costs.
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. As per the proposal, the department of commerce has suggested the Railways Ministry that it needs to clearly distinguish between consignments for exports, imports and general in terms of the freight rates and to work on ways to reduce the delivery time of consignments providing to traders more predictability and reliability and has asked that railways should give competitive rates to exporters.
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. Improvement in port infrastructure would help in reducing transaction costs and boost shipments.
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.