Missing Piece in India‘s Export Growth Story

Missing Piece in India‘s Export Growth Story


India ambition of growing its economy through high growth in exports is plagued with a weak infrastructure capable meeting the need of exports in huge volume. At a time when china is shifting towards consumption-led growth, and facing risk of over capacity in segments such as port and power. If India has to grow it exports the road has to go through building robust and reliable national infrastructure, especially in power and transportation. India wants to grow its export to $1 trillion by 2025, the country is said to be on the right path to achieve its target, India’s quarterly exports has recently crossed a milestone of $100 Billion, this is a special achievement given that this period also marked India’s battle with a deadly second wave of Covid-19. This might be great news but exporters in India struggle to send their goods in overseas markets, this hurdles that they face have been around for decades, if India doesn’t urgently address this difficulties India might never reach its full export potential.

Infrastructure stays India`s weakest hyperlink:

According to Statista`s rating of one hundred international locations primarily based on the quality of their infrastructure in 2019, India`s rating turned into 68.1 at the same time as bottom-ranked Bolivia turned into 10 points behind India, at 57.1. Infrastructure extends to a couple of sectors inclusive of power, communication, water, and waste, but for India’s increasing global trade it is of most importance. India`s under-evolved transport infrastructure poses many threat to exporters, which are:

Congested ports - India`s important ports are facing a critical congestion hassle. This is probably because of excessive shipment volumes, however infrastructural deficiencies – inclusive of container and equipment shortages, outdated navigational aids, lack of technical expertise, and bad port maintenance. If we look outside India`s 2nd busiest port Nava Sheva, truck line can extend more than 10 km on any given day. A key indicator of a port`s performance is turnaround time, or the time it takes a deliver to go into, unload, load, and go out the port. According to the Economic Survey 2020 -21 turnaround time at India`s important ports averages 2.59 days against a global average of 0.97 days.  India majority of trade around 95% happens by sea, such clogged ports are a huge problem to trade flow.

Congested roads - India`s roads additionally carry a prime bite of its freight traffic, India`s street traffic  is among the worst in the world, due to its huge populace and bad road conditions. Losses attributed to street congestion in India are significant. A report from 2018 commissioned by cab hailing business enterprise Uber determined the cost of traffic snarls in four Indian cities – Delhi, Mumbai, Bengaluru, and Kolkata – to be worth $22 billion a year in terms of fuel consumption, productiveness loss, pollution, and accidents.

Lack of connectivity - Exporters in land-locked states are at a disadvantage due to the loss of connectivity to gateway ports. It takes around 46 hours to transport a cargo from a warehouse in Delhi to a port, 3 times longer than in other countries. Bihar, Jharkhand, Himachal Pradesh, Uttarakhand, Jammu and Kashmir, and the North Eastern states are afflicted by poor remote area connectivity. The delivery of agricultural produce which is amongst India`s top exports – suffers from poorly constructed link roads connecting farms with main roads.

Outdated rail equipment - The Indian Railways is a among the world`s 5 biggest rail networks and is ideally suited for carrying freight. Every day on average, 8,479 freight trains delivery 3 million tonnes of freight. However, India`s rail network is limped due to infrastructural issues inclusive of poor outdated equipment , the absence of a present day automatic signaling system, and a scarcity of rakes (a rake is a group of coaches) resulting in loading delays, bad service, and usual inefficiency.

Some feasible answers to Infrastructure issues:

Infrastructure overhaul: India has made development with road construction in recent years. But its maritime infrastructure nonetheless calls for work. Here`s what India is doing and wishes to do to enhance its delivery infrastructure:

Modernise and make bigger ports: In 2015, India introduced  the Sagar Mala Programme with the goal of modernising current ports, growing new ones, improving port connectivity, and ushering in port- India desperately wishes greater ports. It has best one transshipment port, Kochi, and relies upon on Colombo, Singapore, and Port Klang in Malaysia for the transshipment of outbound goods. Therefore it’s a good news that India has proposed a transshipment hub in the Andaman and Nicobar Islands.

Reduce turnaround time: Reducing the time it takes shipment to enter and depart India`s ports from the current 2.59 days is essential to easing the export process. The government`s plan to lessen turnaround time to 1 to 2 days by a step in the proper direction.

Improve road connectivity: India is presently constructing 30 km of highways in a day. This ties in with the targets of the BharatMala Programme, which targets to construct new roads, increase 9,000 km of economic corridors for higher connectivity among production centres and export hubs, and enhance port connectivity.

Indian Carrier Company: An indigenous delivery line is the answer to India`s container and equipment  shortages, says the Federation of Indian Export Organisations (FIEO). The FIEO believes a home-grown provider may also be capable of controlling container rates, that have spiked in the past year because of the equipment shortage and port congestion.

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