Government must free infrastructure to boost India’s competitiveness

By RJ Whitehead

- Last updated on GMT

Government must free infrastructure to boost India’s competitiveness
India could save up to US$50bn a year an be more competitive in global market if the proportion of GDP spent on warehousing and infrastructure were reduced from 14% to 9%, according to an Assocham study. 

With expected inflow of new investments owing to government’s thrust on promoting the domestic manufacturing sector, India’s cargo and logistics industry is likely to clock a compounded annual growth rate of about 16% over the next few years​,” said the study, a collaboration between the industry representative body and Resurgent India, a knowledge firm.

The ‘Make in India,’ campaign will see investments connect India to global production networks that would generate new business for logistics in the country, thereby making it an attractive location to do business as compared to other regions in the world​,” it said.

Growth in the logistics sector would imply improved service delivery and customer satisfaction, thereby leading to growth in exports of Indian goods and potential to create job opportunities​.”

Yet the government must put new infrastructure in place bring down costs and keep pace with development in other countries, it cautioned.

Appropriate policy changes and opening up capacity together with increase in speed for transportation of goods and services through rail, road, water and others is imperative for the growth of the cargo and logistics industry in India​,” said DS Rawat, secretary general of Assocham.

Transportation of bulk commodities through waterways can free up capacity for fast-moving goods, besides setting benchmarks and standards for industry will drive uniformity of warehouses, storage and transport equipment​.”

To encourage infrastructure investment, cheap capital should be made available to logistics service providers, alton with longer credit periods, the study suggested.

The government should create a uniform tax structure and do away with multiple checkpoints and documentation requirements which would lead to speedier delivery of cargo​,” it said.

It also highlighted that passage of a new goods and services tax would further improve the logistics sector’s performance by bringing down distribution costs by up to 15%.

Related topics: Policy, South Asia, Supply chain

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