A recent report from the Global Trade Research Initiative (GTRI) highlights significant challenges facing India’s export sector, emphasising the need for substantial improvements in the country’s maritime infrastructure and capabilities.
According to GTRI founder Ajay Srivastava, India must address several key areas to enhance its position in global trade.
These include increasing domestic container production, promoting the use of locally manufactured containers, strengthening national shipping firms, and improving port infrastructure.
The report underscores the volatility in global shipping costs, noting that freight rates for a 40-foot container have more than doubled for Indian exporters shipping to Europe and the United States over the past year.
This surge is largely attributed to disruptions in the Red Sea. While rates have stabilised around USD 4,775 in 2024, down from USD 4,942 in 2022, they remain significantly higher than the pre-pandemic level of USD 1,420 in 2019.
A critical concern highlighted in the report is India’s heavy reliance on foreign shipping lines.
Approximately 90-95 per cent of India’s cargo is transported by international carriers such as Maersk, MSC, and COSCO, with Indian companies, led by the Shipping Corporation of India (SCI), handling only 5-10 per cent of trade volume. This dependence limits India’s ability to manage costs and schedules effectively.
The GTRI report also points out that about 25 per cent of India’s cargo is transshipped through hubs like Colombo, Singapore, and Klang, further increasing transit times and freight costs.
Additionally, India’s reliance on Chinese-made containers makes it vulnerable to supply disruptions and price fluctuations.
To address these challenges, the report recommends boosting domestic container production. Currently, India produces between 10,000-30,000 containers annually, compared to China’s 2.5-3 million, giving India less than 1 per cent of the global market share.
However, Indian manufacturers face higher production costs, ranging from USD 3,500-4,000 per 40-foot container, compared to China’s USD 2,500-3,000.
As global trade tensions persist and shipping costs rise, the GTRI emphasises the urgent need for India to develop its domestic shipping industry to handle a larger share of its import and export cargo.
This strategic shift is seen as crucial for India to navigate the evolving landscape of international trade more effectively.
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