Top ministries pitch for logistics cost cutting to boost trade

To improve India’s position in the logistics cost index, there is need to lower logistics costs, according to top officials across Union ministries such as Shipping, Railways and Commerce. Also on anvil is a state-level logistics index from the Commerce Ministry.

Speaking at a logistics conference here on Thursday, the Railway Board Chairman AK Mital said there was need to lower costs.

“We move 60 per cent of traffic on just 10 per cent of routes. We have created competing demands for various modes of transport. This is because we are competing for the same traffic, instead of complementing it. Why should road and rail be competing for same traffic?” he asked.

Referring to the Railway Ministry’s public sector unit, Concor, which handles containers, he said the PSU needed to lower logistics costs by improving the conditions of its terminals.

Rajive Kumar, Secretary, Shipping, said: “As part of the Sagarmala project, the Ministry had identified where multi-modal hubs need to come up.” Multi-modal hubs are being favoured to improve coordination, he said.

Varanasi would be the first inland multi-modal hub where the railways, waterways and roads would be integrated. He also emphasised that a “good logistics system needs to be green.”

The Commerce Ministry also stated that the share of logistics costs, as a share of total trade costs in India, was high. “The Ministry is working out a state-level logistics index,” Rita Teaotia, Commerce Secretary, said.

She also raised concerns, such as the alleged nexus between shipping lines and container freight stations, apart from having a common regulatory agency for multi-modal transport, instead of multiple regulatory agencies.

Teaotia called for promoting standardisation of electronic data interchange and having a coordination agency for dispute resolution in the sector.

“But, where should this coordination happen? In many countries, this coordinating agency is housed in Ministry of Transportation. There are some developing countries with export focus, such as China, where it is housed in the Ministry of Trade and Commerce, whereas in Singapore, there are multiple agencies – mix of industry and government,” she added.

Ramesh Abhishek, Secretary, Department of Industrial Policy and Promotion, said they had started working on a master plan for industrial parks, and would soon upload data on the land available for industrial parks.