Fall in freight productivity hitting exports, mfg: FIEO

Apex exporters body Federation of Indian Export Organisations (FIEO) has said that the fall in freight productivity is increasing costs of doing business by increases logistics cost and making manufacturing and exports uncompetitive. President, FIEO, S C Ralhan, while commenting on the fall in freight productivity in the first half of the current year, for the first time since 2010, both in distance and volume terms, said that it is a matter of grave concern not only for exports but for manufacturing as a whole and it reflects the under-investment in railways in the last two decades. FIEO chief stated that as per reports from the Ministry, railway expenditure as percentage of transport sector expenditure used to be about 56 percent in 7th Plan (1985-90) but has been reduced to 30 percent in 11th Plan (2007-12). Indian Railways in last two decades has remained under-invested whereas the road sector has witnessed a surge in investments. The share of Indian Railways in overall GDP has been static at 1 percent and has, in fact, gone down to 0.9 percent in 2012-13. Ralhan stated that while freight contributed 66 percent to the revenues of railways, the cost of freight in terms of the ratio between earnings per Net Tonne Kilometer (NTKM)/cost per NTKM due to cross subsidization had gone up from 129.3 percent in 1999-2000 to 163.7 percent in 2012-2013 making rail freight a unviable means of transportation/uncompetitive but also skewing the modal mix in favour of roads while in most advanced economies it is to the contrary. This also explains the high inland transportation cost which in many cases surpasses the overseas ocean freight. The cost of carrying a container by railways from Ludhiana to JNPT is much more than exporting it from JNPT to a port in Europe added Ralhan. Source: SME Times.

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