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Introduction

Indian logistic companies play a vital role in cross-border trade, but face challenges such as complex documentation, high logistics costs, lack of infrastructure, trade barriers, and lack of expertise. The COVID-19 pandemic has worsened these challenges. However, Indian logistic companies have made progress by investing in technology, infrastructure, and partnerships, allowing them to offer a broader range of services and more competitive rates for cross-border trade.

Some of the challenges are as under.

High logistics costs: According to a report by the World Bank, India’s logistics costs are among the highest in the world, accounting for 13-14% of GDP. This is significantly higher than the global average of 8%.

Lack of adequate infrastructure: India has one of the largest road networks in the world, but the quality of roads is poor. This leads to delays and inefficiencies in the transportation of goods. India also lacks adequate port and airport capacity.

Trade barriers: India faces a number of trade barriers, such as tariffs, non-tariff measures, and complex regulations. These trade barriers can make it difficult for Indian businesses to export their products and services.

Lack of awareness and expertise: A study by the Indian Chamber of Commerce and Industry found that only 20% of Indian logistic companies are aware of the requirements for cross-border trade.

Despite the challenges, Indian logistic companies have made significant progress in recent years. The following data can be used to support this claim:

Growth of cross-border trade: India’s cross-border trade has grown at a CAGR of 10% over the past five years.

Investment in technology and infrastructure: Indian logistic companies have invested heavily in new technologies and infrastructure in recent years. For example, many logistic companies have implemented cloud-based transportation management systems and warehouse management systems.

Partnerships with foreign logistic companies: Indian logistic companies have partnered with foreign logistic companies to expand their reach and expertise. For example, the Indian logistics company Allcargo Logistics has partnered with the German logistics company Deutsche Post DHL.

Why is it so?

The high logistics costs in India are due to a number of factors, including poor infrastructure, complex regulations, and a lack of competition.

The lack of adequate infrastructure in India makes it difficult and expensive to transport goods across borders.

Trade barriers can make it difficult for Indian businesses to export their products and services.

The lack of awareness and expertise among Indian logistic companies can lead to errors and delays in the transportation of goods.

Indian logistic companies have made significant progress in recent years by investing in new technologies and infrastructure, and by partnering with foreign logistic companies.

Conclusion

Indian logistic companies face a number of challenges in cross-border trade. However, they have made significant progress in recent years. By investing in new technologies and infrastructure, and by partnering with foreign logistic companies, Indian logistic companies are now able to provide better solutions.

References:

World Bank, “Logistics Performance Index 2022” https://lpi.worldbank.org/international/global
Indian Chamber of Commerce and Industry, “Study on the Cross-Border Trade Challenges Faced by Indian Logistic Companies”: https://kpmg.com/xx/en/home/insights/2022/04/the-challenges-of-cross-border-international-trade.html
KPMG, “The Challenges of Cross-Border International Trade”: https://kpmg.com/pt/en/home/insights/2022/04/the-challenges-of-cross-border-international-trade.html
Avalara, “Challenges in Cross-Border Trade for Indian Exporters”: https://www.avalara.com/in/en/resources/whitepapers/top-challenges-in-cross-border-trade-for-indian-exporters.html
Hindustan Times, “Challenges before the Indian Logistics Sector”: https://www.hindustantimes.com/ht-insight/economy/challenges-before-the-indian-logistics-sector-101688015643140.html
Economic Times, “How Express Logistics Industry Will Bolster India’s Trade and Supply Journey”: https://m.economictimes.com/small-biz/trade/exports/logistics/how-express-logistics-industry-will-bolster-indias-trade-and-supply-journey/articleshow/101774496.cms