India can save $50 bn in logistics costs, raise growth of exports, says study

New Delhi: India can save up to $50 billion by bringing down logistics costs to 9 percent from the current 14 percent of the country's GDP, according to a joint study by industry chamber Assocham and Resurgent India released on Sunday.

Representational Image. Reuters

Representational Image. Reuters

"India can save up to $50 billion if logistics costs are brought down from 14 percent to nine percent of country's gross domestic product (GDP) thereby making domestic goods more competitive in global markets," the Associated Chambers of Commerce and Industry of India (Assocham) said in a release here.

"With expected inflow of new investments owing to government's thrust on promoting domestic manufacturing sector, India's cargo and logistics industry is likely to clock a compounded annual growth rate of about 16 percent during the course of next few years," the study - Cargo and Logistics Industry in India - said.

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

"Appropriate policy changes and opening up capacity together with increase in speed for transportation of goods and services through various modes, namely rail, road, water and others is imperative for the growth of cargo and logistics industry in India," Assocham secretary general D.S. Rawat said in the statement.

"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," he added.

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

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 added.

In this connection, the study emphasised that passage of the constitutional amendment bill on the Goods and Services Tax (GST) in parliament will further improve the logistics sectors performance by bringing down distribution costs by up to 15 percent.

This landmark bill to reform India's indirect tax regime has been passed by the Lok Sabha, but is stalled in the Rajya Sabha where the ruling National democratic Alliance currently lacks a majority.

Updated Date: May 01, 2016 16:22 PM

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