Small steps, big changes
To encourage ‘Make in India’, a national logistics strategy is required to transform the country into a global manufacturing hub. Efficient logistics do not just reduce transportation cost, but also decrease the overall production cost. A time-bound plan
Prime Minister Narendra Modi has recently launched the ambitious project ‘Make in India’ with the objective to make India a global manufacturing hub. However, logistics has an important role to play as the project’s achievement greatly depends on the continously mounting logistics cost.
The reasons for the increasing logistics costs are transit or custom delays, connectivity and congestion, to name a few. Even a small-scale manufacturer can tell you how transit delay increases his production costs.
Efficient logistics do not just reduce cost of transport and transit time, but also decrease the cost of production. No one can deny the fact that the country needs a massive manufacturing push, given the sector’s lower contribution to the GDP. And to achieve this, a lot needs to be done to bring down the cost of logistics and make more in India.
Efficient logistics is an important determinant of a country’s competitiveness. And, to make the sector efficient, measures are needed to
overcome the barriers such as non-integrated time schedules, customs delays, incompatible standards or an insufficient flow of information about delays, to name a few. Echoing similar views, Bharat
J Thakkar, Joint Managing Director, Zeus Air Services says, “Now it’s high time to address the challenges faced by EXIM, which is keeping the dwell time and transaction cost high, and making them uncompetitive. The best and only answer is to decongest airports by converting existing Container Freight Stations (CFS) and Inland Container Depots (ICD) into Air Freight Stations (AFS) and to ensure their success partnership with the Airport Terminal Operators (ATOs) is required.” “The new AFS guideline came on October 28, 2014 All the stakeholders including airlines, forwarders and customs brokers should work together to make it a success. This is of prime importance to avoid dwell time and dual charges on handling,” he added.
Pillars of the Campaign
“If logistics services are inefficient, firms are likely to maintain higher inventories at each stage of the production chain, requiring additional working capital,” says
Sunil Kohli, Managing Director, Rahat Cargo, in adding, “Since the Prime Minister has been highlighting his agenda to encourage ‘Make in India’, it is essential that all efforts should be made by the government agencies to provide optimal infrastructural support to the exporters and entrepreneurs to voluntarily opt for exporting goods from India.”
“The government needs to initiate its efforts by upgrading the smaller airports in the country by providing with state-of-the-art facilities and adequate infrastructural support. The technological assistance can also be solicited from other countries, if required, to help make such airports operational on the desired level,” he pointed.
“It is bit difficult to expect any government to develop and meet all expectations, so the same applies in India; the most important being infrastructure,” stated Thakkar. “It must also be ensured that a well-built and obstructionfree road to the airport is also accessible,” added Kohli.
Similarly, coordination among the four modes of transport – road, rail, aviation and shipping – to ensure a smooth multimodal system often seems the most difficult. Some measures can go a long way to help reduce the transit cost. First, take up those issues (such as procedural matters) which have already been identified and can be sorted out without any fresh investments or revenue loss to the government. Second, there is a need to divert cargo from the high-cost mode of transport to low-cost mode, i.e. from road to rail and from rail to ship for efficient logistics. Today, roads carry the maximum cargo – nearly 60 per cent – followed by rail (30 per cent) and then coastal shipping (seven per cent). A lot needs to be done in terms of improving the overall supply chain management to bring down costs.
Sunil Kohli Managing Director Rahat Cargo
Bharat J Thakkar Joint Managing Director Zeus Air Services
Sachin Bhanushali President GatewayRail