India can save $50 billion if logistics costs are lowered: Study

NEW DELHI: India can save up to $50 billion (around Rs 3.33 lakh crore) if logistics costs are brought down to 9 per cent from 14 per cent of the country's gross domestic product, thereby making domestic goods more competitive in global markets, says a report.

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.

However, the government needs to put in place requisite infrastructure to keep pace with development across the world, the joint study by Assocham-Resurgent India said.

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

"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.

According to the study, 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.

Access to cheap capital should be made available to logistics service providers for investments in infrastructure, enabling them to extend longer credit periods to their clients and supplementing their working capital, suggested the study.

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.

The study highlighted that passage of the Constitutional Amendment Bill related to Goods and Services Tax ( GST) in Parliament will further improve the logistics sector's performance by bringing down distribution costs by up to 15 per cent.