Indian logistics sector: Poised to grow and eliminate bottlenecks

Globally, India jumped 30 spots this year on the World Bank's ease of doing business ranking list, securing a place among the top 100 countries. CARGOTALK takes a look at the current scenario and how government initiatives has helped the industry to grow

Ashish Asaf MD-CEO, S.A. Consultants & Forwarder

India has jumped to number 100 in the latest ‘ease of doing business’ report for 2018 released by the World Bank but if we shed light on logistics industry, there are various bottlenecks. The regulatory environment in India is clearly not business friendly. Many of the regulations are unnecessary and dispensable. There is a multiplicity of governmental authorities at the national level, state level and the local level. And there are too many agencies at each level. The compliance with the laws gets complex with the vagaries in implementation. The administrative delivery mechanism still relies heavily on the subjective approach of officials; technology platforms for service delivery are available only in a few places. Infrastructure is also a critical element and undoubtedly the government is working on to make it easy like the recent implementation of GST scheme, dedicated freight corridors which is still in process. It would benefit the sector more if the ‘Make in India’ gets an edge over the period. But that is not enough, the systems must facilitate seamless movement of cargo within the country, as well as at the ports, which handles more than 90 per cent of the export, complete digitalisation, promotion of coastal shipping also needs governmental intervention. Apparently, the central government is working on all these fronts, and some results would become visible soon.

Amar More India Cargo Award Winner 2017 & CEO, Kale Logistics Solutions

In the wake of globalisation, the Indian logistics industry has attained immense significance owing to the increase in the volume of pan global trade. India has stood out this year registering a phenomenal index rise in the ‘ease of doing business’ report and is currently ranked at the 100th rank. With India scaling high on these rankings, the logistics sector is expected to be poised for a rapid growth in future. The Indian government’s strategic and focused approach has been incredibly instrumental in achieving the current ‘ease of doing business’ rankings. To support these rankings, government has undertaken several initiatives like establishing logistics parks, improving rail/ road and aviation infrastructure. They have also adopted several policy reforms like GST implementation, ‘Make in India’ initiative, National Integrated Logistic Policy, 100 per cent FDI in warehouses and food storage facilities, e-commerce penetration, economy revival etc. to boost the logistics sector. From the logistics industry perspective some of the notable changes at ground level have been introduction of SWIFT (Single Window for Foreign Trade), electronic delivery orders, usage of digitally signed documents to eliminate unnecessary paper, SVB branch process simplification, promotion of AEO, successful implementation of DPD/DPE, deferred duty payments, reduction in number of mandatory documents for import/export, advance filing of documents, etc. These initiatives have resulted in improvement in dwell times, drastic reduction in demurrage, better working capital management for exporters/importers.

Developing a robust logistics infrastructure to eliminate industry bottlenecks should be the focus. The adoption and emulation of technology in the logistics domain needs to be encouraged. Government can drive standardisation in the logistics industry by making paperless transactions and use of single window platforms, a mandate at ports and airports. National air, rail, port and road community systems are required to bring the stakeholders together on a single platform to eliminate unwanted paper and delays in shipment processing. Allocating pertinent budgets and human capital to plan and strategise the development of logistics sector must be considered. Setting up logistics parks and offering them concessions like SEZ get, can be some options for driving ‘ease of business’ across this domain.

Huned Gandhi Managing Director – India, Dachser

Under the ‘ease of doing business’ umbrella, a lot of initiatives have been taken to facilitate international trade. These steps and actions conducted by the Central Board of Excise and Customs (CBEC) are not only regarded as very beneficial by Dachser.

The SWIFT clearance is as a major positive contributor to making business easier. It enables importers and exporters to file a common electronic 'integrated declaration' on a digital portal, considering the numerous customs requirements. This does not only facilitate customs clearance but also makes the supply chain more transparent.

Since July 2016, the increased use of electronic and mobile platforms also contributes to accelerate clearing for importers acting under the Authorized Economic Operator (AEO) programme.

At the same time, CBEC introduced an Integrated Risk Management facility for Partner Government Agencies (PGAs). The Integrated Risk Management System will ensure that agencies don’t select consignments routinely for examination and testing. The choice will be based on principles of risk management. This will greatly expedite clearance from all concerned parties and help to channelise resources.

Another major initiative is the reduction of standard documents which are required for the import and export. If no specific compliance requirements apply, only three documents have to be issued, namely the Bill of Lading, the invoice cum packing list and the import declaration. This approach contributes a lot to reduce complexity.

Considering these developments, the Indian Customs is amongst a few select countries that have a functional single window clearance including multiple PGAs and integrated risk based selection criteria which is a crucial step to ease business on an international scale.

Vikram Mansukhani Head - 3PL Division, TVSLSL

With the ‘Make in India’ and GST centered reforms coming into force over the last two years, it is absolutely clear that OEMs will deeply partner with their logistics service partners to make their vision of growth and market share, a reality. With the government agreeing to include warehousing under the infrastructure umbrella, the logistics sector has received a much-required boost. However, this is only the beginning of the journey to make doing logistics business truly easy in India.

There are multiple approvals and compliances required to be in place separately as a warehousing service provider and as a transportation service provider. The warehousing infrastructure in the country has not kept pace with the requirements either in terms of quantity or quality. On the transportation side, improvements on the road networks, availability of organised transporters, enablement of IT platforms for visibility and the shortage in availability of drivers leads to huge complexities.

Logistics in India as an industry is going through the same metamorphosis that IT went through almost 20 years back. We need to learn from that experience and proactively create a complete eco system around logistics to make it a successful industry which attracts new and best talent. We are still about five to seven years behind most developed nations in terms of ease of doing logistics and business. The good part though is that the current government too is mindful of this and is heavily engaged in PPP initiatives to improve the overall scenario.

Bharat J Thakkar Past President and Permanent Member - Board of Adviser, ACAAI and Co-Founder & Joint Managing Director, Zeus Air Services

It’s the stakeholders’ responsibility to overcome and accept the changes that has come across the board with ‘Digital India’ dream. Digital business solutions must be aimed at aiding companies in their growth and helping them to understand their offline and online requirements. This spectrum of expertise should cover through PHP ASP(active server page) and development with JSP (java server pages)with backend as well. Solutions delivered must be cost-effective at the same time.

E-business is future of all the verticals. In my opinion, e-commerce solutions must be collaborated with tailor-made solutions which will enable companies to reduce time and get closer to their customer by web connecting solutions.

At customs, single window has brought transparency and reduced dwell time for imports. The same must be implemented for exports of pharma and leather products so that these can move faster, by doing away with regulators, insisting for manual ‘No Objection’. The next step is becoming paperless by 2018. Our industry demands all processes should be system-driven.