India’s G20 presidency may give a push to fair, equitable access to logistics for developing countries

India has been in the limelight for all the good reasons after being selected for the G20 presidency in December 2022, and plans to take full advantage of it. Being a developing country, and being fast-moving at it, the agenda is to advocate on behalf of all the others, to make logistics more accessible. Prime Minister Narendra Modi was very vocal about India’s plans for global supply chains when India took over the presidency. He mentioned that India plans to develop a strong and resilient supply-chain strategy for the post-COVID era through global collaborations and diplomatic efforts that consider the interests of all parties involved.

During its tenure of presidency, though it has no formal power, India will be chairing more than 200 multilateral meetings and setting the tone for discussion around international trade on a global scale. Members of G20 contribute nearly 75% of international trade and over 80% of the world’s economy. It should be noted that India’s presidency of the G20 is critical in light of the ongoing geopolitical scenarios and the looming threat of COVID-19 making a comeback.

“Global supply chains are in ruins. There is a crisis of essentials and essential goods worldwide, and the global challenge for underprivileged citizens is more severe.” said PM Narendra Modi

It was no less than a nightmare for exporters in developing countries when during 2020 and 2021 freight rates shot up the charts and containers were in dearth. According to the exporter communities, freight rates were around 300-350 per cent more than pre-COVID levels. With most shipping containers concentrated in China and the industry controlled majorly by western players, there isn’t much scope left for developing countries to have fair access to supply chain and logistics, which ends up adding to their logistics costs.

“Development of an Indian shipping line of global repute is need of the hour, as exporters are solely at the mercy of foreign shipping lines and the country repatriated over USd 80 billion as transport services cost during the calendar year 2021,” the Federation of Indian Export Organizations said.

Last year, commerce minister Piyush Goyal had expressed dissatisfaction over the opacity of shipping rates. Goyal said the logistics sector had a lot of leakages and that shipping rates were not transparently announced.

Even though in the present times, due to an extreme fall in demand, the shipping rates have reduced considerably, that was not the case during the early years of the pandemic. In absence of homebound shipping lines, India’s shipping industry was reliant on foreign shipping giants which were hesitant about docking on Indian ports and seeked premiums as high as 50%.

However, lately, the Indian government has been working towards making India a global transshipment hub – developing port infrastructure and running PLI scheme for container manufacturers. With 96% of the world’s container manufacturing happening in China, India not only wishes to fulfill its domestic container needs but also stand tall against China in the global container manufacturing business, on the back of the growing demand for containers. In this capacity, it will also be promoting fair access to logistics for many other nations.

“Container manufacturing in India is really a solution to meet the business requirements and will eliminate dependency on China. There is a very high demand in the market specially when break bulk cargo has been converted from a traditional mode of transport to containerised mode.” said MK Nabi, Former Group General Manager, Container Corporation of India (CONCOR).

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