The Disastrously Broken Indian Logistics System India has been trying to compete with the Chinese economy, but one area where India severely lags is in its logistical system. The average speed of freight trains in India is just 25 kilometers per hour, slower than a scooter. This hampers India's growth and affects capital rotation, leading to lower profits compared to China.
The Impact on Profits and Trade Competitiveness "Capital rotation" refers to how quickly money can be reinvested for manufacturing. A faster logistics system allows for more cycles of investment and higher profits. For example, if an Indian trader's freight travels at 25 km/h while a Chinese trader's moves at 45 km/h, the Chinese trader can complete more cycles per year and make significantly higher annual profits (an 80% difference). This impacts trade competitiveness as well.
Solving the Problem: Dedicated Freight Corridors To address these issues, India is building dedicated freight corridors - special lanes exclusively for cargo trains that connect major ports across the country. These corridors will increase rail transportation share by reducing congestion on existing lines by up to 70%. They are expected to improve ease of doing business by speeding up export cycles and reducing transportation costs significantly.