Supply Chain & Logistics should get an industry status
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.
Vice President - Marketing, Safexpress