Sup­ply Chain & Lo­gis­tics should get an in­dus­try sta­tus

Cargo Talk - - Guest Column -

The In­dian econ­omy is striv­ing for im­prove­ments in the field of Sup­ply Chain & Lo­gis­tics to gain a com­pet­i­tive edge in to­day’s global econ­omy. The In­dian government should en­hance its com­mit­ment to­wards the growth of Sup­ply Chain & Lo­gis­tics sec­tor by tak­ing some se­ri­ous mea­sures in the 2013 Bud­get.

The sup­ply chain sec­tor has to­day grown to over USD 110 bil­lion and forms the back­bone of In­dian econ­omy. This sec­tor makes a vi­tal con­tri­bu­tion in the growth and devel­op­ment of the In­dian econ­omy. To­day, when our econ­omy is un­der­go­ing slow­down, Sup­ply Chain & Lo­gis­tics sec­tor has a piv­otal role to play in the swift re­cov­ery of our econ­omy.

There are some fun­da­men­tal is­sues faced by Sup­ply Chain & Lo­gis­tics sec­tor in the coun­try, which make this sec­tor very com­pli­cated. To be­gin with, in­ef­fi­cient in­fra­struc­ture could be the sin­gle most crit­i­cal is­sue that In­dia faces. De­spite a rel­a­tively im­pres­sive eco­nomic growth, In­dia’s di­lap­i­dated roads, con­gested ports, in­ad­e­quate power and com­plex state reg­u­la­tions are im­ped­ing devel­op­ment in Sup­ply Chain & Lo­gis­tics sec­tor. The government’s fo­cus should be to­wards ad­dress­ing th­ese core is­sues faced by Sup­ply Chain & Lo­gis­tics sec­tor at a very quick pace. If th­ese is­sues are ad­dressed well in this Bud­get and the ones to fol­low, then we can ex­pect our eco­nomic growth rates over­tak­ing China in the next few years.

Cur­rently, our Na­tional High­ways form only two per cent of the en­tire Road Net­work in the coun­try, but han­dle over 40 per cent of na­tional road freight traf­fic. This puts tremen­dous pres­sure on the high­way in­fra­struc­ture as well as re­sults in mas­sive traf­fic bot­tle­necks. On an av­er­age, a com­mer­cial ve­hi­cle in In­dia runs at a speed of 20 miles per hour (mph) com­pared to over 60 mph in the devel­oped mar­kets of the USA and West­ern Europe. This brings in lots of in­ef­fi­cien­cies in lo­gis­tics op­er­a­tions, which are trans­mit­ted to var­i­ous other sec­tors of the econ­omy.

The present pace of road in­fra­struc­ture devel­op­ment in In­dia is slow vis-à-vis other de­vel­op­ing economies. The qual­ity of In­dian roads in com­par­i­son with China is well be­low ex­pec­ta­tions and our poor hin­ter­land con­nec­tiv­ity is af­fect­ing the trade growth in the coun­try. Since roads are the pre­dom­i­nant mode of trans­porta­tion in In­dia, there­fore, the government needs to al­lo­cate sig­nif­i­cant bud­get for de­vel­op­ing the road in­fra­struc­ture, with an im­me­di­ate fo­cus on build­ing na­tional and state high­ways as well as im­prov­ing hin­ter­land con­nec­tiv­ity. High trans­ac­tion costs aris­ing from in­ad­e­quate and in­ef­fi­cient in­fra­struc­ture can pre­vent the econ­omy from re­al­is­ing its full growth po­ten­tial re­gard­less of the progress on other fronts. In the up­com­ing Bud­get, the government must take some con­crete steps to im­prove this sit­u­a­tion.

Ef­fi­cient in­fra­struc­ture is the key to the growth of the Sup­ply Chain & Lo­gis­tics sec­tor in In­dia. We would re­quest the government to in­crease its thrust on in­fra­struc­ture devel­op­ment and to take ini­tia­tives for faster devel­op­ment of roads. The Bud­get should ease reg­u­la­tory hur­dles in or­der to fa­cil­i­tate build­ing up of world­class in­fra­struc­ture. To sus­tain growth, In­dia needs sig­nif­i­cant in­vest­ment in

in­fra­struc­ture, in­clud­ing roads, rails and ports in or­der to fa­cil­i­tate faster and more ef­fi­cient move­ment of goods across the coun­try.

Our coun­try also has com­plex Reg­u­la­tory struc­tures, which form a ma­jor bot­tle­neck and af­fect the on-road time of ve­hi­cles sub­stan­tially. Bulk of the time, which a ve­hi­cle takes in mov­ing from one lo­ca­tion to an­other is spent idling on the check posts. Long halts by de­liv­ery ve­hi­cles are re­quired to com­plete the for­mal­i­ties and to pay the cross-bor­der fee at the state bor­ders. The government must ini­ti­ate strong steps in this Bud­get to­wards re­duc­ing th­ese reg­u­la­tory hur­dles.

Mul­ti­ple toll points on high­ways re­duce ef­fi­ciency and in­crease the de­liv­ery lead time. Also, the lack of uni­for­mity in toll charges cre­ates ir­reg­u­lar­i­ties in the cost struc­ture. The government should im­ple­ment a cen­tralised toll mech­a­nism to bring about uni­for­mity in the toll charges across dif­fer­ent check­points. There is a burn­ing need to de­velop more ac­cess­con­trolled ex­press­ways, as they en­sure free pas­sage for heavy ve­hi­cles as well as pas­sen­ger ve­hi­cles. Th­ese mea­sures by the government will help in cur­tail­ing the down­time and en­hance ef­fi­ciency by in­creas­ing the on-road time of ve­hi­cles.

The government also needs to take mea­sures to­wards cre­at­ing more skilled man­power for Sup­ply Chain & Lo­gis­tics sec­tor. There is a huge need to de­velop train­ing in­sti­tutes for truck drivers, as the ma­jor man­power gaps are at the bot­tom of the pyra­mid. Also, there is a huge need for de­vel­op­ing vocational as well as pro­fes­sional cour­ses in the area of Sup­ply Chain & Lo­gis­tics.

We ex­pect that ware­hous­ing would be a ma­jor fo­cus area for Sup­ply Chain & Lo­gis­tics sec­tor for sev­eral years to come. In or­der to cre­ate world-class ware­hous­ing fa­cil­i­ties in In­dia, the government needs to cre­ate con­ducive en­vi­ron­ment. There is a need for long-term in­vest­ment from pub­lic as well as pri­vate play­ers for build­ing ware­hous­ing fa­cil­i­ties. The government, on its part, needs to bring about land re­forms, which will help in set­ting aside lands for cre­ation of lo­gis­tics fa­cil­i­ties.

The most im­por­tant rec­om­men­da­tion to the government would be to pro­vide the Sup­ply Chain & Lo­gis­tics sec­tor an in­dus­try sta­tus. Given the mas­sive con­tri­bu­tion this sec­tor makes in the growth of our econ­omy, it is im­per­a­tive that it should be pro­vided an in­dus­try sta­tus at the ear­li­est. With this sta­tus, the over­all per­spec­tive to­wards Sup­ply Chain & Lo­gis­tics would change. The busi­ness will get its due in terms of be­ing taken far more se­ri­ously. We must re­mem­ber that a ma­jor part of our econ­omy is de­pen­dent on the Sup­ply Chain & Lo­gis­tics sec­tor. This sec­tor has far-reach­ing im­pli­ca­tions on the econ­omy and is piv­otal to the over­all growth and devel­op­ment of the econ­omy.

Vi­neet Kanau­jia

Vice Pres­i­dent - Mar­ket­ing, Saf­ex­press

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