Despite recent GDP growth, India is widely seen as encumbered by transportation inefficiencies. One in two Indian firms identifies transportation of raw materials and produced goods as an obstacle.
Trucks in India run at one-third of the speed of developed countries. The cost is substantial: a recent World Bank study estimates logistics costs in India exceed those in advanced economies by 4-6% of GDP.
India’s recent GST policy is one of the world’s most ambitious tax reforms and some of its components are directly aimed at reducing the costs of interstate freight transport. Most notably, the legislation abolished check posts at state borders and introduced electronic bills to replace paper documents. Reduction of these barriers to interstate transactions is expected to facilitate greater internal and international trade.
This research project aims at understanding effects of policy-induced transportation bottlenecks on the flow of goods in India. It wants to estimate how recent logistics-related reforms associated with the Goods and Services Tax (GST) policy have affected goods movement within the country, domestic trade, and international transactions. It also wants to identify additional bottlenecks and the scope for alleviating them.