Exporters in Asia's third-largest economy face a slew of hurdles to faster business growth compared with its emerging market peers, from bureaucratic tape to congested roads and hefty freight charges on trains and ports.
The average cost to move a container within India is $945, more than double the cost of the export giant China's $460, Malaysia's $450 and Vietnam's $625, government data showed.
The trade ministry announced measures such as round-the-clock staffing at some of the country's biggest ports and giving speedier clearances to farm and health products potentially saving close to half-a-billion dollars a year.
But, top officials acknowledged that such reforms were "low-hanging fruit" and that deeper change would only come with the consent of key ministries such as railways and ports.
"While we have been able to increase our exports substantially...our share in the global merchandise trade is only about 1.5 percent," Finance Minister Pranab Mukherjee said at an announcement of policy measures.
"We are committed to help the exporters. We recognise that it is essential to first of all reduce the total time taken for exports -- the time cargo is ready in the factory till it leaves the Indian shore. Secondly, we need to take measures that will reduce the financial cost of export transactions."
India is targeting close to 15 percent export growth in the current financial year ending March as the country pulls away from the global economic slowdown, which sapped demand from many traditional export destinations in the U.S. and Europe.
While IT and service exports have played a huge role in India's economic boom, merchandise exports have lagged behind their potential, officials say.
Lost in Transaction
Indian exporters pay around $13-15 billion for transaction costs, of which losses from poor infrastructure and red tape account for as much as $6 billion, said junior trade minister Jyotiraditya Scindia at the same event.
India has announced a slew of initiatives to overhauling the country's creaking infrastructure with a planned spend of $1.5 trillion in the 10 years to 2017, though it has often missed construction and funding targets from power to road-building.
"Lowering of shipping rates, we need to work on. Lowering of railway freight rates, we need to work on," Scindia said.
"But please understand that these are not easy to complete because there are revenue ramifications for the shipping department and revenue ramifications for the railway department. We need to build a lot of consensus." (Reuters)
