In fact, the manifold growth of domestic and international trade has created the need for just-in-time fast-track deliveries, which led to the growth of the express delivery services (EDS) industry. The revenue of the global EDS sector is projected to increase from $263 billion in 2020 to $378 billion by 2027 and $484 billion by 2030. Between 2003 and 2020, the global express market had a compound annual growth rate (CAGR) of 4.2%. The Asia-Pacific region accounted for 40% of the global revenue in 2020, within which China and India are among the fastest growing markets. Further enhancing e-commerce can help India attain its export targets of $1 trillion for goods and services each, by 2030.
The size of the EDS industry in any country often reflects the country’s share in international trade. In 2020, the turnover of the Indian EDS sector was only $5.5 billion, which was around 2% of the global market, which is similar to the country’s percentage share in global exports of goods. Although small, the EDS sector in India has seen a high compound annual growth rate (CAGR) of around 15.8% in the recent past. This industry can help connect small and medium enterprises (SMEs) in India to their global markets and be a behind-the-stage growth driver.
E-commerce and EDS players work hand in hand. With high e-commerce growth, partnering with e-commerce companies, express industry start-ups like Delhivery and Ecommerce Express have already become success stories. These along with established players like DTDC, GATI, TCI Express, Safex, etc, play an important role in connecting enterprises, especially SMEs, to the domestic and global markets.
With the government’s focus on developing unique products in each district and the FTP 2023 focusing on setting the stage to bring these products to the global market, e-commerce and express delivery companies are working together to help connect the SMEs, from different districts and clusters to global business partners and consumers. The benefit of the EDS is that the time of delivery across most global destinations varies between same day delivery to delivery between 24 to 72 hours. Both consumers and suppliers are able to keep track of their shipments through the use of digital technology.
India is rapidly changing. While in the past documents were one of the key components of the business of express companies, today it is e-commerce. Some of the traditional users of express delivery are knowledge-based, and technology industries like financial services, electronics, consumer durables and telecommunications and high-value products like certain types of handicrafts.
After the coronavirus pandemic, with the growing demand for healthcare essentials (such as hospital supplies, vaccines, gloves, sanitizers, etc.), the healthcare sector has become an important user of EDS globally along with fast-moving consumer goods. Indian SMEs also use this mode to send samples and high-value and niche ethnic goods like handicrafts, gems and jewellery and handloom products. The global EDS industry has proven that it can help to build resilient supply chains in an era of pandemic, geo-political tensions, and supply chain disruptions, and that they play a vital role in getting essential commodities to the doorstep during the pandemic related lockdown, as witnessed in India. Realising that a modern express delivery system can help to reduce delays, and enhance the global competitiveness of user industry, the FTP 2023 has rightly focused on this sector and on trade facilitation. The extension of FTP benefits to e-commerce exports is the right decision. This along with initiatives like the PM Gati Shakti – National Master Plan for Multi-modal Connectivity and the National Logistics Policy 2022 will lead to overall development in transport and logistics infrastructure, including Custom modernisation and paperless trade.
With the right technology and efficient transport and logistics, SMEs located in remote and rural areas will be able to access both Indian and global customers, in the future. India has over 63 million micro, small and medium enterprises (MSMEs), which accounted for around 30% of the GDP and 50% of exports, in 2020. Under the Aatmanirbhar Bharat Abhiyan, the government wanted to increase the share of MSMEs to 40% of the GDP and 60% of exports, which is possible by connecting them to the global market through e-commerce and express delivery.
Industry estimates show that, in India, the growth rate of the express industry is 2.5 times the nominal GDP growth rate. The sector employs around 3 million people. Globally around 85% of freighter aircrafts are run by express operations. With plans to connect remote regions like the north-east and different districts through an efficient multimodal transport system, India’s exports through e-commerce mode can easily double if certain hurdles like the value limit on exports through the courier mode are addressed, and a robust risk management system is implemented for fast-track cargo clearances.
To further mitigate risk, a voluntary disclosure scheme as in countries like the USA and Thailand, may be implemented which will build trust and confidence in an environment where express companies can work together with Customs for cargo clearances.
The Express Industry Council of India (EICI) jointly with Indian Customs has developed a state-of-the-art electronic Express Cargo Clearance System (ECCS) for Customs clearance of express shipments. This system can be linked to allied agencies like FSSAI and Drug Controller for a more robust risk management for products, which requires a “no objection” of these agencies.
The author is a professor at ICRIER.
