Export thrust: India should move goods like a horse to trade like a Tiger

India has taken big strides in its logistical infrastructure but must press ahead with reforms to meet its aspiration of becoming a global trading powerful. Easing and speeding up exports is critical to that endeavour.

India’s merchandise exports grew by a significant 39% from $317.5 billion in 2014 to $441.7 billion in 2024. This rise in exports testifies to India’s ambition of positioning itself as a global manufacturing and export powerhouse. Flagship government schemes, such as production-linked incentives (PLI), Make in India and the Phased Manufacturing Programme have played a vital role in India’s export thrust.

The ‘trading across borders’ indicator from the World Bank’s 2020 Doing Business data-set showed that exporting from India took significant time and money. On average, border procedures alone took 52 hours and $212 per container. Export documentation consumed 12 hours and $58. Importing took even more—with around 65 hours and $266 needed for border clearance, and 20 hours and $100 for documentation.

In comparison, China was processing the same export shipments within 21 hours at a slightly higher cost of $256 per container. It processed documents faster too, in 9 hours on average, although the documentation cost is $74, slightly higher than in India.

India was better placed than the likes of Bangladesh and Vietnam, but behind countries like South Korea, which was the world leader on those counts. South Korea was doing border checks in just 13 hours at a cost of $185, and document processing in 1 hour for only $11. All these numbers showed the gap India needed to cover in competition with the world’s best export performers. While Doing Business data is old and the World Bank has discontinued this study, its broad 2020 rankings may not have changed very much (except in Vietnam’s case perhaps).

More recent data from the World Bank’s Logistics Performance Index (LPI) offers us another picture. This index tracks the transportation of goods within and between countries, taking into account six measures: customs efficiency, infrastructure, ease of coordinating international shipments, logistics quality, tracking and tracing ability, and punctuality (frequency of on-time shipments).

India: On the move

The country is catching up with China on the movement of goods within and across borders but still has some distance to cover.

Logistics performance index, India and China

As reported by the 2023 LPI report, India has taken significant strides on logistics, moving its world ranking from No. 54 in 2014 to No. 38 in 2023, with its score rising from 3.08 to 3.4. Its ranking on timeliness rose from No. 51 to No. 35, and its score for logistics competence and quality rose from 52 to 38, signifying higher professionalism and reliability in freight services.

Moreover, in terms of infrastructure (covering ports, roads and railways), India’s rank rose from No. 58 to No. 47, reflecting the impact of recent investments in physical logistical infrastructure.

Still, China is ahead of India on an absolute basis, at 19th place with a score of 3.7. It scores better on all the key factors: timeliness, quality of logistics and impressively on infrastructure, indicating the strength and dependability of its supply chain mechanisms. India’s progress is heartening. Yet, continued efforts are needed to reach the logistics performance of global leaders.

India has also achieved impressive reductions in ‘dwell time’—the number of days that cargo is held at a terminal or port before it can proceed. In the LPI 2023 report, while 4 to 8 days is the typical dwell time for economies at every level of income, India is on par with Singapore with a dwell time of only 3 days. This is an achievement ahead of the UAE, South Africa, US and Germany, indicative of improved coordination between customs officials, port authorities and logistics firms.

Underpinning these efficiency gains is India’s massive investment in transport and logistics infrastructure. The coverage of National Highways (NH) increased from 65,569km in 2004 to 146,145km in 2024, with four and more lane stretches rising 2.6 times since 2014.

The construction tempo has picked up sharply, from 12.1km per day in 2014-15 to 33.8km per day in 2023-24. Flagship programmes such as the Bharatmala Pariyojana launched in 2017, are developing 26,000km of economic corridors, ring roads, bypasses and elevated corridors to ease city congestion and enhance freight movement. As of November 2024, 18,926km of roads had been constructed under this scheme.

Apart from this, 35 multimodal logistics parks are also being built under the Bharatmala plan, with an aggregate outlay of ₹46,000 crore. On commissioning, these parks will be capable of transporting 700 million metric tonnes of cargo, increasing India’s capacity to integrate various modes of transport in a cost-effective manner.

India’s port cargo handling capacity has nearly doubled from 800.5 million tonnes annually in 2014 to 1,630 million tonnes in 2024, an increase of 87%. India has also climbed in terms of its world ranking in shipments, from No. 44 in 2014 to No. 22 in 2023. Concurrently, the turnaround time (TRT) at major ports—the time that ships spend at port—has declined significantly from 94 hours in 2013-14 to 48.06 hours in 2023–24. Average berth-day production has gone up by 52% and India is also seeing increased tourism through cruise terminals and lighthouse sites.

These reforms can be said to represent a paradigm shift. India is slowly putting in place the logistical framework necessary to support its dream of becoming an export-led economy. Continued and deepened, these reforms could bridge the gap between India’s expansive trade aspirations and the harsh realities of trading on the international stage, thus making India not just a significant exporter but a truly competitive one.

The author is a research associate, NCAER, New Delhi. Views are personal.

Assam is wary of digital payments. It’s stalling the growth of MSMEs

Data from a recent survey on MSMEs in Assam shows a paradox. While most MSMEs have adopted digital payment systems, a large share of their customers still prefer to pay in cash.

According to a recent survey conducted by the National Council of Applied Economic Research (NCAER) for the Directorate of Economics and Statistics (DES), Assam, nearly 87 per cent of MSMEs in the state have adopted at least one form of digital payment. This is promising.

Among medium enterprises, the adoption rate stands at an impressive 95.5 per cent. Small enterprises report an adoption rate of 87.5 per cent, while micro enterprises follow closely at 86.7 per cent. These figures signal a high level of digital readiness and a willingness among entrepreneurs to embrace change.

However, a closer examination of transaction data reveals a paradox. While the adoption is high, actual use of digital modes of payment remains relatively low. The NCAER survey shows that only about 31.3 per cent of total transactions for micro enterprises are conducted digitally. Small enterprises fare better, with 51.47 per cent of total transactions being digital, and medium enterprises lead with 76.57 per cent. This wide gap between the adoption and active use of digital payment systems tells a larger story—one where the missing link is not the business owner, but the customer.

Why customers don’t pay digitally

The reality on the ground is that even though MSMEs have installed digital infrastructure, a significant share of their customers still prefer to pay in cash. Whether it is a local grocery store, a tea stall, or a tailoring shop, the digital payment option is often available but rarely used. This reluctance among customers stems from a combination of behavioural, technological, and cultural factors.

For many people, particularly in tier-3 towns and rural areas, cash remains a deeply embedded mode of payment. It feels more tangible and trustworthy than a digital transaction that takes place on a screen.

Another important barrier is digital literacy. Many customers, especially the elderly or those with limited education, find mobile payment apps difficult to navigate. Others fear fraud or worry that if something goes wrong with the transaction, there is no clear route for recovery. In some cases, customers believe that using cash gives them more flexibility or helps them manage their spending better.

This gap between the availability of digital options and their actual use is not just a technological issue. It has far-reaching implications for the MSME ecosystem. Digital payments create financial records that are crucial for accessing credit, applying for government schemes, or building business credibility. Without a strong history of digital transactions, many small businesses remain outside the formal financial system. This makes it harder for them to grow, scale up, or survive during economic shocks. In a region like Assam, where MSMEs are central to employment and income generation, this disconnect could hold back broader development.

Bring MSMEs in digital mainstream

It is also worth noting that the Northeast has been identified as a key focus area for India’s future growth. Described by Prime Minister Modi as the “Ashta Lakshmi”—a potential source for the country’s eightfold prosperity—the region is expected to play an important role in national progress. For this vision to become a reality, the MSME sector in Assam and neighbouring states must be brought fully into the digital mainstream. This will not happen if digital readiness is limited to business owners alone. Customers must also become active participants in the digital economy.

So far, most policy interventions have focused on the supply side—on helping MSMEs adopt digital tools, install QR codes, and attend training sessions. These efforts have delivered encouraging results. But the next phase must address the demand side. There is a need to invest in customer awareness, trust-building, and habit formation.

People must be shown that digital payments can be easy, safe, and rewarding. Campaigns in local languages, community-based outreach, and visible grievance redressal systems can all help build public confidence. Above all, digital financial literacy must be treated as a public good—something that empowers citizens and strengthens the economy.

MSMEs in Assam have taken an important step toward a digital future. They have embraced technology and demonstrated their willingness to evolve. But unless customers also make this shift, the benefits of digital transformation will remain limited.

A truly digital economy cannot be built by businesses alone. It requires customers who are informed, confident, and willing to adopt new behaviours. Every stakeholder—from governments and banks to fintech companies and civil society—must focus on turning digital payments into a habit.

The groundwork has been laid, and the opportunity is clear. It is only a matter of bringing the customer on board.

Palash Baruah is a fellow at the National Council of Applied Economic Research (NCAER), Delhi. Poonam Munjal is a professor at NCAER. Views are personal.

Understanding the Santiago Principles

The Generally Accepted Principles and Practices for sovereign wealth funds (known as the Santiago Principles) represent a notable experiment in voluntary multilateral cooperation. Yet recent critiques fundamentally misunderstand their nature and purpose, treating them as mere transparency guidelines rather than a comprehensive macro-financial governance architecture. This misreading ignores both their historical context and contemporary relevance—a particularly troubling oversight given that these funds now manage assets equivalent to approximately 12% of global GDP, up from 3-4% when the Principles were drafted, according to IMF and World Bank data.

Beyond Investment Vehicles: The Macro-Financial Reality

Traditional sovereign wealth funds are not hedge funds with flags. They are integral components of national economic management, acting as instruments for balance of payments adjustment, fiscal stabilisation, and intergenerational wealth transfer. When sovereign wealth funds accumulate assets from current account surpluses or commodity exports, they are managing national savings. When they invest these assets, they affect cross-border capital flows, exchange rates, and global imbalances. Countries accumulating current account surpluses from commodity exports or trade imbalances use sovereign funds as mechanisms for recycling these surpluses into global markets while serving domestic policy objectives—how these funds are recycled forms the core of each fund’s capital deployment framework.

This macro-financial context shaped every aspect of the drafting of the Santiago Principles. The framework recognises that fund governance cannot be divorced from fiscal rules, monetary policy coordination, or exchange rate management. A stabilisation fund managing oil revenues and prioritising liquidity operates under different macro-financial constraints than a long-term savings fund investing in infrastructure or a strategic fund supporting domestic development. The Principles accommodated this diversity while establishing common standards—a balance critics miss when demanding rigid uniformity. This macro-financial foundation necessarily creates a dual challenge for sovereign funds.

The Dual Dimension: Domestic Accountability, Global Responsibility

Uniquely, sovereign funds straddle domestic and international spheres. Domestically, they must serve national objectives, such as smoothing budget volatility, conserving commodity wealth, or supporting development. Citizens and parliaments demand accountability for managing national patrimony. Internationally, these same funds operate as major investors subject to market expectations and recipient country regulations.

The Santiago Principles reconciled these dual demands. Domestic legitimacy requires signatories to have clear objectives, robust governance, and accountability mechanisms. Internationally, they commit funds to transparency, commercial orientation, and regulatory compliance. This dual legitimacy—serving sovereign purposes while respecting international norms—represents the Principles’ core innovation.

Recipient country perspectives proved crucial in shaping this balance. The European Union’s comprehensive policy frameworks on sovereign investment, the United States’ CFIUS regulations, and other destinations’ investment screening mechanisms all influenced the Principles’ development. The Principles addressed these through governance commitments that build trust while preserving sovereign prerogatives. This grand bargain—standards for access—continues to underpin global investment flows.

Meeting these dual demands required an innovative governance approach—one that could accommodate diversity while maintaining credibility.

Framework, Not Straitjacket: Principled Flexibility

Critics who demand prescriptive rules misunderstand the guiding approach to the Principles’ design. By establishing overarching governance standards while allowing sovereign-specific implementation (as public sector governance requirements vary country by country), the framework accommodates diversity in fund types and objectives. Norway’s Government Pension Fund Global, which saves oil wealth for future generations, implements the Principles differently from GIC, which builds Singapore’s economic resilience for countercyclical intervention.

This principle-based approach mirrors other successful international frameworks. Like the OECD Guidelines for Multinational Enterprises or the UN Principles for Responsible Investment, the Santiago Principles create common standards adaptable to diverse contexts. The framework demonstrates portability: strategic investment funds focused on domestic development adapt the governance principles while acknowledging different mandates; climate funds pursuing net-zero objectives build on the transparency frameworks while incorporating sustainability metrics; infrastructure funds supporting national development apply governance standards while recognising public policy objectives.

The framework’s twenty-four principles address fundamentals—legal clarity, defined objectives, accountability structures, risk management, and appropriate transparency—without dictating operational details. This balance enables a Kuwaiti stabilisation fund focused on budget support to adopt the same principles as a Chinese investment corporation pursuing strategic assets, each implementing them appropriately for their mandate. The genius of this flexible framework became evident in how it emerged—through dialogue rather than crisis.

Preventive Diplomacy: Cooperation Through Rising Tensions

The Santiago Principles emerged from a unique moment of preventive diplomacy—not crisis management but crisis prevention. As concerns about sovereign investment mounted in 2007-2008, initiative-taking engagement prevented positions from hardening into protectionism. Unlike Basel banking standards born from bank failures or G20 reforms following the market collapse of 2008, these Principles were negotiated while tensions were rising, but before any sovereign wealth fund had triggered a systemic incident. This achievement resulted from patient, mediated dialogue among diverse sovereigns—oil exporters managing commodity windfalls, Asian surplus countries recycling trade surpluses, and Western recipients seeking investment while fearing political influence.

This preventive cooperation matters. Surplus countries understood that governance standards would facilitate international acceptance of their growing funds. Recipient countries recognised that engagement beats protectionism. The resulting framework reflected a genuine consensus achieved through patient dialogue, demonstrating that enlightened self-interest could produce effective international standards without the pressure of crisis.

The voluntary nature proved a strength, not a weakness. Soft law—voluntary guidelines without a legal enforcement mechanism enabled participation by diverse sovereigns with different legal traditions and political systems. As with principal-agent theory in economics, the Principles addressed information asymmetries between fund managers and multiple stakeholders, creating accountability mechanisms that reduce agency costs without prescriptive rules.

Importantly, this soft law has gained hard influence: the Santiago Principles are now referenced in international investment agreements, trade treaties, and regulatory frameworks, demonstrating how voluntary standards can become embedded in the legal architecture of global finance. While precise compliance metrics remain proprietary to protect commercial sensitivities, observable market behaviour, from reduced investment screening challenges to enhanced fund access to global markets, suggests meaningful adoption. Yet even the most thoughtfully designed framework faces the test of real-world shocks.

Implementation Challenges: Context Matters

The Principles’ implementation must be understood within the extraordinary shocks that followed their adoption.

The 2008 global financial crisis demanded immediate domestic fiscal responses, often drawing on sovereign wealth funds. The COVID-19 pandemic required unprecedented fiscal interventions, with many funds pivoting to domestic stabilisation. Wars in Europe and the Middle East, surging inflation, aggressive interest rate hikes, and ballooning global debt with limited fiscal space—all these shocks conditioned how sovereign wealth funds could implement governance standards while meeting urgent domestic needs.

This context explains varying approaches towards implementation better than any critique of the Principles themselves. When nations face existential economic challenges, domestic imperatives understandably take precedence. The Principles’ flexibility allowed funds to adapt while maintaining core governance standards, precisely the resilience rigid rules would have prevented.

Contemporary Relevance and Future Evolution

Today’s fractured global economy underscores the value of the Principles. As investment screening proliferates and financial weapons multiply, adherence to recognised governance standards provides crucial protection. Funds demonstrating transparency and commercial orientation face fewer political obstacles than opaque vehicles suspected of hidden agendas.

As the global economy stabilises, capital markets and asset classes find new equilibrium, and geopolitical fragmentation eventually abates, sovereign wealth funds and IFSWF members will need to reckon with a world vastly different from 2008. In keeping with the spirit in which the Principles were drafted, it must be assumed that the Principles framework will evolve to reflect the new global and domestic macro-fiscal and structural realities. Climate imperatives, digital transformation, shifting trade patterns, exchange rate preferences, and evolving development models all demand consideration.

The Principles already enable such adaptation. Climate considerations are integrated within risk management frameworks. Development mandates pursuing transparent governance structures. Domestic investment programs implement accountability standards. The framework’s flexibility accommodates evolution without requiring revolution.

Indeed, many sovereigns now establish domestic development funds alongside their traditional SWFs, funded not from surpluses but through budgets, bonds, or asset transfers. Despite different capital sources, the macro-financial and fiscal underpinnings remain remarkably similar: these funds must coordinate with monetary policy, align with fiscal frameworks, and manage public resources for long-term objectives. The Principles’ architecture proves its worth precisely because it addresses these fundamental macro-financial realities, not just specific funding mechanisms.

As new state-owned investment and development vehicles emerge—from climate and technology funds to infrastructure banks—the Principles offer a tested template. Their balance of standardisation and flexibility, their reconciliation of domestic and international legitimacy, and their demonstration that voluntary cooperation can produce effective governance all provide lessons for managing sovereign capital in an interconnected world.

Conclusion: The Next Chapter

The Santiago Principles deserve recognition as a comprehensive governance architecture and international soft law, not outdated transparency guidelines. They embedded fund governance within macro-financial frameworks while accommodating sovereign diversity. They balanced domestic accountability with international legitimacy. They achieved multilateral cooperation through preventive diplomacy.

Seventeen years later, the Principles have proven their worth not through rigid adherence but through principled adaptation. As sovereign wealth funds continue their growth trajectory since 2008, their macro-financial role and governance matters more than ever. The question is not whether the Principles need revision, but how their evolutionary framework can guide the next generation of sovereign-owned financial vehicles.

Critics who focus on narrow governance mechanics while ignoring this broader context miss the forest for the trees. The real test ahead is whether the spirit of multilateral cooperation that created the Principles can survive in our fragmenting world. If it can, the Santiago Principles will continue to provide architecture for recycling global surpluses in ways that serve both sovereign purposes and systemic stability. That would be a legacy worth defending—and building upon.

Udaibir Das is a Visiting Professor at the National Council of Applied Economic Research, Senior Non-Resident Adviser at the Bank of England, Senior Adviser of the International Forum for Sovereign Wealth Funds, and Distinguished Fellow at the Observer Research Foundation America. He was previously at the Bank for International Settlements, the International Monetary Fund and the Reserve Bank of India. The views expressed are personal and in no manner attributed to the IFSWF Secretariat or Board.

Methodology for Assessing Skill Shortages and Gaps

In the present era, characterised by an overwhelming pace of technological changes, especially with Artificial Intelligence (AI) likely to come into play in every sector, skilling, reskilling and upskilling will be key to address the changing nature of goods and services in demand. The objective of the present exercise is to evolve a dynamic and flexible methodology which can be applied uniformly across various sectors of the economy to identify skill shortages and skill gaps.

The model is aimed at assessing, anticipating and adapting skills at both national, state and local levels at regular intervals to enable the skilling eco-system to also evolve with technology to ensure the employability of the existing and future workforce.

Several rounds of studies were carried out earlier to assess skill shortages and gaps, but every such exercise was carried out using a different methodology, making it challenging for the policymakers to have a holistic view on the skill demand and supply. Further, while individual sectors are able to make forecasts for their sectors, there are occupations that are in demand across sectors. It is necessary to capture those occupations that cut across sectors.

This document contributes towards developing a uniform and standardised methodology to help assess skill shortage and gaps across sectors.Methodology for Assessing Skill Shortages and Gaps Presentation

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National Skill Gap Study for High Growth Sectors

The Ministry of Skill Development and Entrepreneurship (MSDE) had undertaken the study titled National Skill Gap Study for High Growth Sectors under the Skills Acquisition and Knowledge Awareness for Livelihood Promotion (SANKALP) programme. This study was undertaken by the National Council of Applied Economic Research (NCAER).

The primary aim of the study is to create a dynamic framework for skill gap assessment that can be regularly updated to predict skill requirements in line with the evolving economic landscape. To ensure uniformity and standardisation a methodology for conducting demand assessments at both sectoral and State levels has been developed. This effort will significantly inform the design of skill initiatives at the national and State levels.National Skill Gap Study for High Growth Sectors

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