India’s transportation and logistics sector is at an inflection point. By several estimates, this industry is expected to double to a $300 billion market in the next five years. India’s ecommerce boom coupled with a host of other Government of India (GOI) initiatives are additional catalysts. However, India’s logistics industry is dominated by the informal (“unorganized”) sector, accounting for 80 percent of its total logistics market. In other words, this sector is fragmented and inefficient, thereby performing below its potential. The GOI estimates that improvements in infrastructure and connectivity could reduce time to export by 5 days, with savings of $1 billion per annum to the Indian economy. Moreover, the industry’s transformation from informal to the formal (“organized”) sector will demand a similar transformation in supply chain performance. Gradual reforms to the supply chain will not only ease this transition, but also transform the speed and efficiency of trade and position India as a regional logistics hub.
The USIBC Supply Chain Logistics Committee engages with GOI officials on the most instrumental these policy changes, including efficient implementation of the Goods and Services Tax (GST), impetus from “Make in India,” and India’s rise on the World Bank’s Logistics Performance Index.
Enhancing the efficiency of India’s supply chain by supporting logistics providers will facilitate growth across all sectors of the Indian economy.
Modernize customs processes, specifically allowing for pre-arrival processing, clearance and release.
Encourage simpler rules on outsourcing and contracting out some functions in the chain to local vendors so as to improve customer service.
Advocate for the rapid implementation of the commitments undertaken as part of the WTO agreement on Trade Facilitation.
Raise the export limit threshold for commercial exports via courier mode from INR 25,000 to INR 5,000,000 to boost exports from India to facilitate exports for MSME’s and help them engage in cross border e-commerce.
Deployment of adequate customs officials and an increase in manpower at courier and cargo terminals would reduce customs clearance dwell time and allow 24x7 customs clearance at major airports (e.g. Bengaluru).
Use unified global norms to adjust existing de minimis regime for low value commercial shipments (courier) to encourage growth of cross border e-commerce and reduce customs administration cost. This would free up valuable resources for customs to focus on higher risk items.
Reduce commodity, weight and value restrictions for processing shipments in courier mode.
Recent customs improvements (e.g. single window clearance via cargo mode) should be expanded to courier clearance mode.
Make all national and state highway tolls FASTag accessible with more efficient posting of account credits/discounts.
Relating to Goods & Services Tax (GST)
Clarify and simplify regulations in the Goods and Services Tax bill on interstate movement of vehicles loaded with export-import goods.
Allow for zero-rate status on international transport (freight and courier) services (both exports and imports).
Unify treatment of rail containers and road containers under the same GST slab.
Allow an option for both Forward Charge Mechanism (FCM) and Reverse Charge Mechanism (RCM) to be available in the same GST network (GSTN).
Adopt logistics-friendly e-way bill rules under GST and consider feedback from the logistics sector in developing the rules.
Trade Facilitation Agreement
Roll out single window for courier clearances through the use of pilot programs, rigorous testing, and with minimal data elements.
Improved access of information (forms, duties, fees, valuation rules, restrictions, penalties, etc.), accessible and searchable online – as well through “push” notifications.
Reduce unnecessary or redundant documentation requirements through the use of pilot programs, private sector feedback, and voluntary roll out of reforms.
Standardization of processes regarding the development of new rules and regulations – to include the use pilot programs.
Strengthen risk-based targeting process to ensure that all government agencies deploy the highest standards and minimize physical inspections.
Address space/leasing concerns at airports.
Clarify FDI rules for cargo airlines.
Address regulations that prevent US aircraft operators from performing their own security functions (e.g. x-ray screening).
Nick Mancini serves as the head of logistics, operations, and civil aviation at the U.S.-India Business Council. He heads up USIBC's member services along with managing the Council's accounts. Mancini is also responsible for coordinating advocacy efforts within USIBC's various portfolios and initiatives. Mancini has been with USIBC for 10 years, supporting its Board of Directors, operations, and staff. Mancini studied at the University of Mary Washington in Fredericksburg, VA where he graduated in 2004 with a bachelor’s degree in History.
He can be reached at Nmancini@usibc.com.
Kelsey Cadden serves as Associate Manager of Operations at the U.S.-India Business Council. She supports the development of policy agendas, programs, and events for USIBC, in addition to any other department projects as needed.
Prior to her role with USIBC, Cadden was the coordinator for the Middle East Affairs Department at U.S. Chamber of Commerce. She supported the U.S.-Egypt Business Council, the U.S.-Iraq Business Initiative, and the U.S.-Israel Business Initiative. She was also responsible for regional programming for the Middle East and North Africa. Cadden has two bachelor’s degrees from American University, one in International Relations and one in International Economics. She can be reached at email@example.com.