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Reducing trade costs can boost exports

India has the opportunity to improve its share of global trade, especially in exports, through increased competitiveness. It will probably be the only country to deliver nearly double-digit growth in container trade this year.

Reducing costs by a fourth can substantially boost exports in sectors like textiles, pharmaceuticals, electronics and auto components. Costs can be reduced by prioritizing digitization, inland infrastructure development, an efficient regulatory environment and developmental training. These can boost exports by five to eight per cent.

Indirect or hidden costs of trade in textiles, pharmaceuticals, electronics and auto components accrue from unreliable transport services and regulatory or bureaucratic delays and are as high as 38 to 47 per cent of the total logistics cost. A ten per cent reduction can boost India’s competitiveness and contribute additional revenues of up to 5.5 billion dollars annually.

Indian ports and terminals are well placed to deliver efficiencies and higher productivity. Terminals can collectively contribute better to lowering costs of trade with certain interventions such as market driven tariff regime, better rail connectivity from ports and reducing middle men or increasing transparency in inland movement of cargo.

APM terminals in Nhava Sheva has consistently increased its container throughput and productivity since 2006 and as a result has improved India’s liner shipping connectivity, delivering an additional nine per cent in trade.