The lack of technology integration between stakeholders needs to be addressed to realize the full potential of the express delivery service industry in the country, according to business think tank ICRIER.
In a report titled “Express Delivery Services – Supporting Travel to India @ 2047” published yesterday, the Delhi-based mindset highlighted the need to address regulatory and technological barriers hampering the express delivery services industry.
In addition to the limited deployment of technology by MSME actors in this segment, there is a lack of technology integration between agencies such as Express Cargo Clearance System (ECCS) ECCS and GST Network (GSTN)/Directorate General of Foreign Trade (DGFT)/Special Economic Zone (SEZ) online, Customs and Participating Government Agencies (PGA’S), observed the study and stressed the need for rapid reforms by government.
Prepared by ICRIER in collaboration with Express Industry Council of India (EICI) and Academic Foundation, the report explores how EDS can support India to achieve its high and inclusive growth on its journey to Amrit Kaal. With India holding the G20 presidency in 2023, there is growing interest to focus on building efficient trade logistics and improving the country’s integration into global value chains.
Rakesh Mohan, Member of the Prime Minister’s Business Advisory Council (EAC-PM), said: “In order to increase the efficiency of the sector, it is important to know how we calculate logistics costs. This report gives us insights into the regulations that need to be addressed and how digitization needs to be improved in the industry.”
The Indian EDS sector has a share of around 2% of the world market, similar to the country’s export share. The sector has grown at a CAGR of 15.8% over the past decade and has created more than 3 million jobs. By 2047, one in four express deliveries will be outside India, with the EDS sector playing a crucial role in India’s competitiveness, ICRIER said.
With the nation aiming to reach the $17 trillion GDP target by 2047, the study projects three growth scenarios (optimistic, conservative and pessimistic) for the express delivery industry. On the optimistic case, the industry is expected to grow at 21% pa due to India’s strong growth prospects, helped by other fundamental changes such as PM Gati Shakti – National Master Plan for Multimodal Connectivity, Implementation of National Logistics Policy, 2022, Demand from emerging middle income class in urbanizing cities and communities. In the conservative and bearish scenarios, the industry is forecast to grow by around 18% and 15%, respectively, due to future global shocks, slowdown or stagnant domestic reforms, etc.
The report advocates the need to double the sector’s contribution to world trade and India’s share of world exports, while embracing global best practices, investing in R&D in areas such as green technology, technology adoption and creating a competitive environment and equals Competitive playing field for different service providers and modes of transport as well as infrastructure development.
RS Subramanian, Vice Chairman, EICI and Sr. VP, DHL Express South Asia, said: “The report emphasizes the critical need to connect Indian MSMEs to global markets and value chains, and advocates the implementation of global benchmarks in infrastructure, technology and policies for Improve business operations.”
In the recently introduced Foreign Trade Policy (FTP) 2023, the government raised the consignment-related cap for exports by courier service from 5 lakh to 10 lakh. While this is welcomed by the industry, the ICRIER report calls for a complete lifting of export caps to facilitate the export of high-value products such as handicrafts, gems and jewelry, and electronics, as well as high-tech products such as semiconductors, etc.