Unlocking the potential of Express Delivery Services is vital for the growth of the economy: ICRIER study

· ICRIER releases report on "Express Delivery Services (EDS) - Supporting the Journey towards India@2047"

· The Indian EDS sector has a share of around 2 per cent of the global market, similar to the country’s share in exports

· The EDS sector grew at a CAGR of 15.8 per cent 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

New Delhi, 4^th April 2023: 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. The report titled “Express Delivery Services - Supporting the Journey towards India@2047", was launched by Shri Piyush Goyal, Hon’ble Minister, Ministry of Commerce & Industry, Consumer Affairs, Food & Public Distribution and Textiles, Government of India. 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.

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 change 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.

In a welcome move, 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 a welcome move, 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. Since none of our competing countries have export caps, this will enable our exporters to choose the most efficient mode for exports. Not only will it attract investments, but will further increase the sector’s contribution to the economy. The increase in economic activity is expected to at least double the demand for the B2B and B2C express delivery services and greater express movement in domestic as well as international markets. Dedicated freight corridors, with secure uploading and downloading facilities, can also be a game changer for this sector.

Commenting on the report, Dr. Rakesh Mohan, Member, Economic Advisory Council to the Prime Minister (EAC-PM) and President and Distinguished Fellow of CSEP, 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.”

Expressing his views, Mr. R. S. Subramanian, Vice Chairman, EICI and Sr. VP, DHL Express South Asia said, “The ICRIER report highlights the growth of the express delivery services industry and its role in supporting trade and economic development within India, as well as connecting India globally. 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.”

The report is well aligned with the newly announced Foreign Trade Policy initiatives that aim at fostering collaborations with State governments, increasing the adoption of technology for inter-government connectivity, and reducing logistics costs, to promote export as well as fast-track the integration of SMEs in domestic and global value chains. As SMEs and the trading sector are the key users of EDS, their growth including onboarding into e-commerce platforms will drive the growth of this sector. The sector is labour-intensive and will continue to create numerous employment opportunities in the country.

Dr. Deepak Mishra, Director & CE, ICRIER, said, “Express deliveries at competitive prices are essential to India’s integration into global value chains. This report discusses policies that can help to improve the efficiency of the sector and enhance India’s trade competitiveness. It is worth noting that the industry is not asking for subsidies; its focus is on global best practices for trade facilitation and ease of doing business.”

In conclusion, 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.

The conference also hosted notable speakers such as Dr. Surendra Ahirwar, Joint Secretary - Logistics, Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry, Government of India, Mr. Gaurav Masaldan, Joint Secretary – Customs, Central Board of Indirect Taxes & Customs (CBIC), Mr. Deepak Srivastava, Managing Director – Indian Subcontinent, UPS, Ms. Tulsi Nowlakha Mirchandaney, Managing Director, Blue Dart Aviation, Mr. Abhishek Chakraborty, Executive Director, DTDC, Mr. Satyaki Raghunath, Chief Strategy & Development Officer, Bangalore International Airport Limited, Ms. Smita Bhandari, Partner, Ernst & Young as well as research organisation heads and senior private stakeholders.