Finance Ministry, Railways working on ways to cut logistics cost for exports

Source: The Economic Times, Nov 25, 2016

NEW DELHI: The finance and railways ministries are working on ways to cut logistics costs which make exports uncompetitive, Commerce and Industry Minister Nirmala Sitharaman said today.

The Minister said that she has discussed the increasing logistics costs with the Finance Minister. “I have very clearly stated that logistics costs are increasing and therefore, we are becoming less competitive… We have definitely asked different authorities at different levels. We have asked the Railways and the Finance Ministers to look into this. They are working on it,” she told PTI in an interview.

“We do not want this kind of a cost which is not due to the inefficiency of the manufacturer,” she added.

Worried over slow growth in exports, the Commerce Ministry has pitched to enhance the logistics competitiveness of exporters.

The department of commerce has suggested to the Railways Ministry that it needs to clearly distinguish between consignments for exports, imports and general, in terms of freight rates.It was also suggested to the railways to work on ways to reduce the delivery time of consignments providing traders more predictability and reliability.

Indian exporters have time and again demanded drastic cuts in freight rates to enhance price competitiveness in the global markets as costs of exports is currently very high in India.

Citing an example, an industry expert said that 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 mainly happens through roads due to various reasons like high railway freight rates, unreliable scheduling of freight trains and poor last-mile connectivity.

The Commerce Ministry is also in consultations with the ports 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 the need to invest billions in improving infrastructure to boost exports. It had asked the government to invest in modernising roads, ports, railways, airports, power and customs stations. Between December 2014 and May 2016, exports fell for 18 straight months due to weak global demand and slide in oil prices.

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