The (i) opening of a direct shipping lane from China to India and (ii) exporting tea to Pakistan by rail rather than by sea are good supply chain initiatives. They will reduce the supply chain time and hence reduce the supply chain costs.
Shorter supply chain times imply lower inventories, faster reponse to demand, and a shorter sale-to-cash ratio, all of which will improve the bottomline and topline of businesses.
This is another example of how good infrastructure can be a business driver. This also shows that supply chain is a strategic function- not just a transactional function of loading trucks, warehousing stocks- and can impact the business positively.
As the rupee appreciates and exports get costlier, these supply chain initiatives which reduce costs, are needed to keep exports competitive. The government need not handover sops in the form of tax breaks. What it needs to do is concentrate on improving infrastructure, reducing bottlenecks at customs and ease cross-border trade procedures.
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