Lack of technology integration in express delivery remains a concern: ICRIER

Lack of technology integration in express delivery remains a concern: ICRIER

New Delhi: Lack of technology integration among stakeholders needs to be addressed to actualise the full potential of the express delivery services industry in the country, economic think tank ICRIER has said.

In a report titled “Express Delivery Services – Supporting the Journey towards India@2047″, launched yesterday, the Delhi based think stressed the need for addressing regulatory and the technology related barriers affecting the express delivery services industry.

Besides the limited use of technology by MSME players in the 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), the study observed, highlighting the need for fast tracking reforms by the government.

The report prepared by ICRIER in collaboration with the Express Industry Council of India (EICI), and Academic Foundation, explores how EDS can support India in achieving its high and inclusive growth as it embarks upon its journey towards Amrit Kaal. With India holding the G20 Presidency in 2023, there is a growing interest to focus on building efficient trade logistics and enhancing the nation’s integration in global value chains.

Rakesh Mohan, Member, Economic Advisory Council to the Prime Minister (EAC-PM), said, “To increase the efficiency of the sector, it’s important to know how we calculate the logistics costs. This report gives us insights into the regulations that need to be addressed and how there is a need to improve digitalization in the sector.”

The Indian EDS sector has a share of around 2% of the global market, similar to the country’s share in exports. The sector grew at a CAGR of 15.8% in the past decade and, has created more than 3 million jobs. By 2047, one out of four express deliveries will be outside India, with the EDS sector playing a critical role in India’s competitiveness, ICRIER said.

Given the nation’s aim to achieve the USD 17-trillion GDP target by 2047, the study projects three growth scenarios (optimistic, conservative and pessimistic) for the express delivery industry. In the optimistic case, the industry is expected to grow by 21% annually, on back of India’s strong growth outlook, aided by other fundamental changes such as PM Gati Shakti – National Master Plan for Multi-modal Connectivity, implementation of the National Logistics Policy, 2022, demand from rising middle-income class in urbanising cities and towns. In the conservative and pessimist scenarios, the industry is projected to grow at 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 double India’s share in global exports while adopting global best practices, investments in R&D in areas like green technology, adoption of technology and providing a competitive environment and level playing field across different service providers and modes of transport along with infrastructure development.

R. S. 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 for the implementation of global benchmarks in infrastructure, technology, and policies to improve the ease of doing business.”

In the recently launched Foreign Trade Policy (FTP) 2023, the government has raised the consignment-wise cap on exports through courier mode from ₹5Lakh to ₹10 Lakh. While this is welcomed by the industry, the ICRIER report calls for a total removal of export caps to facilitate exports of high value products like handicrafts, gems and jewellery and electronics as well as cutting edge technology products like semiconductors etc.

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