The pandemic hit the global exporters and India is not an outliner. As per the reports, the pacing rate of recovering is faster in China as compared to India. There are various reasons for the same:
- India’s consequent restrictions on trade lead to a delay in turnaround time for ships.
- Exporters in India have to pay high freight charges due to a shortage of containers.
- Freight charges to the Middle East double over a period of time.
- Europe freight charges rise to $8,000per container from $2000 per container.
- While a reasonable appreciation can be justified to fuel price hike, this massive increase witnessed in India allude to a sinister plot of artificial shortage creation and cartelization by shipping lines.
- 15-20 days delay in getting space, vessel, and slot hampers the trading sector.
- The unclogging of goods at the global level is unpredictable.
- China has a high processing time that’s one big reason China’s suppliers are luring the large ships with higher freight charges.
The global disaster of Covid-19 hits exporters at a crucial time when they are striving to reap advantages of the resurgence in international demand for commodities. Moreover, the nation’s $400 billion export goal for FY 2022 is also threatened.
Compared to the previous year’s August delivery rate, currently, there is a bounce of over 300%. This has certainly increased the concern of the central government that’s why it has already started to look for various options to settle the same. To melt the blow of exporters, The Government Of India should look forward to eradicating the logistical strains and offer non-permanent fiscal help.
As per the exporters, the state-run Shipping Corporation of India (SCI) caters to less than 5% of the $60 Billion home market; that’s not enough to properly handle the orderly evolution of the delivery price graph.
We are getting uncompetitive in comparison to other countries, especially China. For our basic commodities like Rice, our suppliers are not able to trade. In the recent past, we have exported different verities of rice to China and Vietnam also. The price of the commodity is not a problem, but the overall price goes really high due to the high cost of logistics, due to that traders and farmers are not in a position to quote, get orders, and get desired margins. The Government of India must immediately look into this matter, otherwise, it will affect both the exporters and farmers in a big way.
Much Needed Futuristic Plan:
India has a very good opportunity to revive its trade market post-pandemic.
It is high time for The Government Of India to look into the current ongoing Logistics problem caused by Covid-19. There are various solutions to solve this crucial problem and the Government of India, must focus on some of the below-mentioned key highlights. The Government of India must look forward to both measures- the long term and the short term. Take a final decision after brainstorming both measures.
- The Government Of India must think for the long term and take necessary steps immediately to make India a Global Exporting Hub.
- For the next 6 months- 1 Year, the Government Of India must consider the demand to the extent the fiscal support to covid-19 hit exporters.
- To lure the giant players to systemizing the delivery strains in India, The Government Of India should start weighing every concept of long-term measures along with the Tax and various incentives.
- For specific farm products exporters, The Government Of India must plan to reintroduce the TMA (Transport and Marketing Assistance) Scheme for at least 1 year.
- In order to compete with China, The Government Of India must support Logistics services.
- The Government Of India should look at developing its container roadmap very seriously especially if we really want to move towards self-reliance. In times to come, this problem will accentuate as we work towards reducing imports and boosting exports in the country.
- Along with this, The Government Of India should encourage home firms to increase the manufacturing of containers, as the shortage of shipping containers is additionally building unnecessary pressure in the crisis.
Mr. J.K Arora, An International Trade Expert and Founder Chairman of Tradologie.com – World’s 1st next-generation Global B2B platform for Agri-commodities and Branded Food products.