Digitalize all supply chains to unlock trade efficiencies

Synopsis: India has risen on the World Bank’s Ease of Doing Business Index from 77 in 2018 to 63 in 2019 across 190 countries. Its 68th rank in “trading across borders” can be improved upon through digitalization.

Introduction

In the age of the fourth industrial revolution, India must digitalize supply chains to reduce inefficiencies, improve transparency, reduce logistics costs. It will enhance the overall global competitiveness of Indian industries, especially small and medium enterprises.

What is the need for digitalization of the supply chain?

Higher logistic cost: Logistics cost in India is estimated at around 13% of gross domestic product (GDP).

In 2018, India’s rank on the World Bank’s Logistics Performance Index was No. 44 among 160 countries, below such countries as China (26), Chile (34), and South Africa (33).

No seamless connectivity: The interaction between importers and customs is not seamless. Data has to be submitted via a customs broker or authorized courier in most cases.

To ease governance: Digitalization will enable direct tracking and traceability and enhance tertiary processes like audits, financial transparency, and risk management through data feeds, collection and abstraction.

What are the steps taken by the government?

Digitalization measures: Initiatives such as the Goods and Services Tax Network, GST, have been game-changer in improving the experience of importers, exporters, and logistics service providers.

Apart from ICES 1.5 and ICE GATE, new developments like the Express Cargo Clearance System for express delivery and Single Window Interface for Trade for electronic data interchange across multiple agencies involved in customs clearance have also eased business processes.

The Central Board of Indirect Taxes and Customs has launched its eSanchit mechanism for paperless processing and the uploading of supporting documents to facilitate trade.

Steps taken by the private sector: For example, DHL Import Easy Tool is a first-of-its-kind website-based platform. It globally offers a single interface where importers can view and manage all their transactions pertaining to the import process in real-time.

It is being piloted in India and is designed to be a one-stop intuitive platform for importers.

What are the suggestions to improve digitization?

First, the Indian industry must develop and integrate innovative tools and India’s government should facilitate their use and secure technology interfaces in partnership with the industry for their implementation.

Second, companies can be given some incentives to adopt digitalization. For example, subsidizing logistics costs.

Source: This post is based on the article “Digitalize all supply chains to unlock trade efficiencies” published in Livemint on 3rd September 2021.

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