News / Indian government intervenes to help exporters facing higher costs

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Frustrated by high shipping costs, India’s exporters have won some government support – albeit a little belatedly, as supply-demand dynamics have begun to settle.  

Container Corporation of India (Concor) has significantly rationalised its container storage and handling tariff policies, both for empty and laden boxes. An offshoot of Indian Railways, Concor is the largest container rail operator in the country.  

Shippers now have an extended 90-day ‘free time’ for storage of empty containers at Concor’s inland terminal in Nhava Sheva, one of its largest. Empties overstaying this waiver window will receive a 50% rebate in storage fees, along with similar incentivised handling rates for laden export containers, Concor announced.  

Nhava Sheva terminals command a substantial share of India’s containerised trade, so the tariff cuts are a boost for the sector.  

Additionally, Shipping Corporation of India (SCI), India’s flag-carrier, has devised a business programme to deploy more container vessels on the larger trades out of India, intending to raise its sagging liner profile.  

“On an immediate basis, [ocean] capacity will be enhanced by 9,000 teu,” the government said. “SCI will also buy additional five containerships to further enhance cargo handling capacity.”

The announcements followed a stakeholder engagement session with government leaders in New Delhi, chaired by union industry minister Piyush Goel, to look into the concerns of the exporting community.  

“The decisions will result in significantly breaking down shipping costs, improving availability of containers, resolving the empty containers issue, faster evacuation of export consignments and reducing congestion at the ports,” said Mr Goyal.  

Local industry experts, however, believe that with the market still exposed to constant disruptive events, cargo interests must expect supply chain volatility.  

Empty container flow has been impacted by the longer vessel transits around the Cape of Good Hope, while ports have had to deal with space pressure, due to sporadic stronger-than-usual volume increases, they argued.  

Ocean rates on major trades out of India have also cooled considerably from the recent surges, though they are still above pre-pandemic levels.  

The government had been under pressure to reinvigorate merchandise exports since the latest data reported a steeper 9% year-on-year decline for August. Exporters complained that they have had to refocus on the domestic market, due to an uncompetitive environment stemming from elevated logistics charges and persistent supply chain challenges.  

“Profitability in exports has taken a hit,” said Ashwani Kumar, president of the Federation of Indian Export Organisations (FIEO). “The government should also look at facilitating trade through easy and low cost of credit,” he added.  

To that end, FIEO this week inked a strategic partnership deal with London-based trade financing platform Stenn to provide “provide tailored financial solutions” to Indian companies, especially small-and medium-sized enterprises (SMEs) facing a liquidity crunch.  

“This collaboration seeks to drive export growth by equipping SMEs with the necessary financial tools to scale their operations and seize international opportunities,” said FIEO.  

“With only 15% of SME addressable credit needs being currently met by formal channels, we are stifling the potential of our most dynamic sector,” said FIEO director general Ajay Sahai, explaining the need for other credit options. 

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