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  • 8/12/2019 Logistics Sector-Present Situation and Way Forward

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    Logistics SectorPresent situation and way forward

    January 2012

    www.deloitte.com/in

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    Contents

    About Deloitte 4

    About ICC 5

    Overview 6

    I. Challenges faced by the Logistics industry in India 8

    II. Impact of challenges faced 13

    III. The way forward 14

    Bibliography 16

    Websites 18

    Contacts 19

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    About Deloitte

    Deloitte is one of the largest professional services

    organizations in the world with a worldwide presence of

    over 182,000 professionals in over 150 countries, with

    $28.8 billion in annual revenue (FY11). Deloittes global

    presence is highlighted below.

    Deloitte is a multidimensional professional services

    organization that offers Consulting, Assurance and

    Enterprise Risk Services, Tax, and Financial Advisory

    services. These services offered by Deloitte to its clients

    have helped develop an in-depth understanding of

    various sectors like Public Sector & Government,

    Healthcare and Life Sciences, Manufacturing, Aviation,

    Transport and Infrastructure, Energy and Resources,

    Consumer Business, Global Financial Services Industry

    (GFSI) etc. Deloitte today is considered a service provider

    of choice to government entities and public sector

    organizations over the world. We brings together a

    unique combination of experience and capabilities

    to help clients address their most complex business

    problems.

    Deloitte in India constitutes a large and important part

    of the global firm, with over 15,000 professionals spread

    over 13 locations - Ahmedabad, Bangalore, Baroda,

    Chennai, Coimbatore, Goa, Gurgaon, Hyderabad,

    Jamshedpur, Kochi, Kolkata, Mumbai and Pune. Deloitte

    in India takes pride in their ability to deliver to clients

    the right combination of local insight and international

    expertise.

    Deloitte in India provides a full range of management

    consulting, financial advisory services, Accounting,

    Tax and IT solutions delivery to clients, tailored to

    their specific requirements leveraging professionals

    comprising primarily Engineers, MBAs and Chartered

    Accountants.

    The advisory operations of Deloitte in India are

    domiciled in Deloitte Touche Tohmatsu India PrivateLimited, which is a member firm of the Deloitte Touche

    Tohmatsu network in India.

    MumbaiPune

    Ahmedabad

    Baroda

    New Delhi

    BengaluruChennai

    Coimbatore

    Kolkata

    Goa

    Kochi

    Hyderabad

    Jamshedpur

    Deloitte presence in India

    Asia Pacific113 offices in 26 countriesKey Offices: Pakistan,Singapore, Thailand,Vietnam, Indonesia

    India15000 Professionals in 13 officesKey Offices:Mumbai, Delhi,Hyderabad, Bangalore, Kolkata

    Africa & Middle East46 offices in 35 countriesKey Offices: Johannesburg,Cape Town, Kenya, Tel Aviv

    South America69 offices in 28 countriesKey Offices: Sao Paulo, MexicoCity, Buenos Aires, Santiago,Caracas

    North America131 offices 2 countriesKey Offices: New York,San Francisco, Los Angeles,Denver, Toronto, Montreal

    Deloitte: Global network - 150 countries : 182,000 people

    Europe297 offices in 47 countriesKey Offices:London, Frankfurt,Paris, Rome, Dusseldorf, Madrid,Moscow, Prague

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    About ICC

    Founded in 1925, Indian Chamber of Commerce (ICC)

    is the leading and only National Chamber of Commerce

    operating from Kolkata, and one of the most pro-active

    and forward-looking Chambers in the country today. Set

    up by a group of pioneering industrialists led by Mr G

    D Birla, the Indian Chamber of Commerce was closely

    associated with the Indian Freedom Movement, as

    the first organised voice of indigenous Indian Industry.

    Several of the distinguished industry leaders in India,

    such as Mr B M Birla, Sir Ardeshir Dalal, Sir Badridas

    Goenka, Mr S P Jain, Lala Karam Chand Thapar, Mr Russi

    Mody, Mr Ashok Jain, Mr.Sanjiv Goenka, have led the

    ICC as its President. Currently, Mr. Shrivardhan Goenka

    is leading the Chamber as it's President. ICC is the

    only Chamber from India to win the first prize in World

    Chambers Competition in Quebec, Canada.

    ICCs North-East Initiative has gained a new momentum

    and dynamism over the last few years, and the Chamber

    has been hugely successful in spreading awareness

    about the great economic potential of the North-East atnational and international levels. ICC has a special focus

    upon Indias trade & commerce relations with South &

    South-East Asian nations, in sync with Indias Look East

    Policy, and has played a key role in building synergies

    between India and her Asian neighbours like Singapore,

    Indonesia, Bangladesh, and Bhutan through Trade &

    Business Delegation Exchanges, and large Investment

    Summits.

    ICC also has a very strong focus upon Economic

    Research & Policy issues - it regularly undertakes

    Macro-economic Surveys/Studies, prepares StateInvestment Climate Reports and Sector Reports, provides

    necessary Policy Inputs & Budget Recommendations to

    Governments at State & Central levels.

    The Indian Chamber of Commerce headquartered in

    Kolkata, over the last few years has truly emerged as a

    national Chamber of repute, with full-fledged offices

    in New Delhi, Guwahati, Patna and Bhubaneshwar

    functioning efficiently, and building meaningful

    synergies among Industry and Government by

    addressing strategic issues of national significance.

    Indian Chamber of Commerce, New Delhi Office

    D -118, Ashirwad Complex

    Green Park Main

    New Delhi - 110 016

    Phone: 011 46101431-38

    Fax: 011 4610 1440/1441

    E-mail: [email protected]

    Indian Chamber of Commerce, Head Office

    4 India Exchange Place, Kolkata 700 001

    Phone: 033-22303242

    Fax: 033 2231 3380, 3377

    E-mail: [email protected]

    Website: www.indianchamber.net

    Indian Chamber of Commerce, Bhubaneswar Office

    32-East Ashok Nagar,

    Bhubaneswar, Orissa

    Phone: 91-674-2532744

    E-mail: [email protected]

    Indian Chamber of Commerce, Guwahati Office

    House No.209, 2nd Floor

    Opp. Overtnite Express

    Near AIDC, R.G.Barua Road

    Guwahati - 24

    Phone: 0361 2460216 / 2464767

    Fax: 0361 2461763

    E-mail: [email protected]

    Indian Chamber of Commerce, Bihar Office

    11/B, Dumri House, Kavi Raman Path,

    East Boring Road,Patna 800001 BIHAR.

    Tele Fax No.: +91-612-2533636

    E-mail: [email protected]

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    Overview

    The logistics sector in India has today become an area

    of priority. One prime reason for the same stems from

    the reason that years of high growth in the Indian

    economy have resulted in a significant rise in the volumeof freight traffic moved. This large volume of traffic

    has provided for growth opportunities in all facets of

    logistics including transportation, warehousing, freight

    forwarding, express cargo delivery, container services,

    shipping services etc. The growth path has also meant

    that increase demand is being placed on the sector to

    provide the solutions required for supporting future

    growth. Going forward it will not be wrong to say that

    the strength of the logistics sector is likely to be one of

    0

    500

    1000

    1500

    2000

    2500

    3000

    1950-51 1978-79 1986-87 2007-08

    TotalOriginating(MillionTonnes)

    Source: RITES

    Growth in Freight Volumes the key determinant of the pace of future growth of the

    economy.

    Various estimates put the market size of the logistics

    sector in India to be between USD 90-125 billion. Given

    that the Indian economy has grown to over USD 1.73

    trillion these estimates may already be well below the

    actual size of the industry. Sources also estimate that the

    industry employs over 45 million people and is growing

    at the rate of 15% with sub-sector growing at even

    30-40% per annum. Due to its current growth and its

    future growth potential the Indian logistics sector is

    viewed as one of the most attractive in the world. The

    Emerging Market Survey, 2011 conducted by Transport

    Intelligence highlights Indias attractiveness as a strong

    growth area for logistics in the future. The survey found

    that nearly half of its respondents agreed that India

    would emerge as a major logistics hub in the future.

    Also Indias rapid growth and market size were the key

    factors for global players looking at opportunities in the

    region.

    Despite holding promise the logistics sector in India

    remains mired in several complexities which have the

    potential of holding it back. These include significant

    inefficiencies in transportation, poor condition of

    storage infrastructure, a complex tax structure, low rate

    of technology adoption and poor skills of the logistics

    professionals. The key challenges for the sector are

    highlighted in the following section.

    0

    20

    40

    60

    80

    100

    120

    140

    160

    India

    Brazil

    UAE

    R

    ussia

    SaudiArabia

    Tu

    rkey

    Vietnam

    Q

    atar

    Malaysia

    CzechRep

    ublic

    Mexico

    Jo

    rdan

    Ukraine

    Indonesia

    Chile

    Tha

    iland

    E

    gypt

    Pak

    istan

    SouthA

    frica

    O

    man

    Phillipines

    Argentina

    Peru

    Colombia

    Venezuela

    Algeria

    Tanzania

    Camb

    odia

    Slovakia

    O

    ther

    Source: Agility Emerging Markets Logistics Index, 2011

    Survey carried out on 338 industry professionals around the world

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    I. Challenges faced by theLogistics industry in India

    Transportation related challenges

    In India road has become the predominant mode of

    transportation of freight cargo. Estimate of the modal

    movement of cargo highlights that In India nearly 61%

    of the cargo is moved by road, 30% by rail and rest

    by airway, pipelines and inland waterways. This is as

    compared to a 37% share of road in the USA and 22%

    in China.

    It is recognized that movement of long haul bulk traffic

    by road is less efficient than by rail. But road is stillpreferred over rail because:

    Important rail networks are oversaturated: There

    has been little investment in track infrastructure since

    independence. While route kilometer has grown

    only at a CAGR of 3%, track kilometer, incorporating

    additional lines on existing routes, has not fared much

    better growing at a low CAGR of 6.6%. During the

    same period freight and passenger traffic has grown

    at a CAGR of nearly 54%. This has led to most high

    density corridors becoming over saturated.

    Rail freight tariffs are high: Indian Railways followsa policy of subsidizing passenger tariff by freight tariff.

    This has resulted in a sharply rising trend in railway

    freight rate over the years compared to an almost

    stagnant passenger tariff rate. The result of this has

    been that Indian rail freight rates have already become

    one of the highest in the world, with freight rates

    in India being nearly 4 times that in United States. If

    truck overloading is also taken into account then rail

    freight rates work out to be higher than road freight

    in many instances.

    Transit times are long and uncertain: Freight traffic

    is frequently subordinated to passenger traffic on the

    railway network. This results in a freight train taking

    as much as 6-8 days for a journey of 2000 kilometers.

    Also there is no guarantee provided on the transit time

    for freight trains.

    Rail terminal quality is poor: Most rail terminals

    (goods shed) used for loading/unloading of freight are

    antiquated. They also suffer from issues of access and

    evacuation of traffic.

    Less flexibility in carrying different types of

    products: Special wagons are not easily available for

    carrying specialized products. For example special

    types of steel required for automobile production

    have to be carried by trucks as the existing wagons

    do not offer the kind of protection that these high

    value products require. While customers are allowed

    to request for new wagon designs the process of

    getting these wagon designs approved by railways is

    cumbersome.

    Railway carriage not easy for industries which

    cannot provide full train loads: Railways have a

    preference for customers who can provide full train

    load as unlike in some other countries, railways in

    India no longer run mixed trains which can carry

    different types of cargo. Operational efficiency is cited

    as the major reason for the same. While containerized

    rail movement can provide for freight movement for

    industries with smaller rake loads domestic container

    movement has not taken off in a big way- with one

    of the issues being a lower priority being accorded to

    container trains on the railway network.

    0

    500

    1000

    1500

    2000

    2500

    1950-51 1978-79 1986-87 2007-08

    CargoCarriedin

    milliontons

    Sources: RITES

    Rai lway Highway

    0

    20000

    40000

    60000

    80000

    100000

    Kilometers

    Source: Indian Railways

    Route and Track Km. Growth

    Route kilometersTrack kilometers

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    While road movement is preferred to rail, road

    movement has its own fair share of issues. These

    include:

    Inadequate road network coverage: Freight

    movement in India is dependent on National

    Highways. While National Highways constitute only

    about 2% of the road network of India they carry

    nearly 40% of the total traffic. As a result most of

    these highways are severely congested- resulting in

    freight travelling only a third of the distance compared

    to developed countries.

    Poor road quality: The road quality in India, on

    the National Highways as well and other roads, is

    improving but is still poor in many locations. Estimates

    suggest that motorable roads are still less than 10%

    of the total road network. Large stretches of National

    Highways are also two laned in many stretchesreducing their capacity to handle large traffic loads.

    Expressway network will take time to develop: In

    many developed countries expressways have been

    developed to facilitate high speed freight movement

    through linking of important cities, ports and industrial

    centers. In India the expressway network is still largely

    at a planning stage with a target of development of

    around 15,000 kilometers of expressways only by the

    end of the 13th plan period.

    High level of fragmentation of the trucking

    industry: The trucking industry in India is largely

    fragmented and in the hands of small truck operators.

    Estimates suggest that nearly 70% of the truck owners

    in India own between 1-5 trucks. As a result of

    disaggregated ownership there is fierce competition

    amongst operators leading to truck owners resorting

    to overloading to recover investments. Also due to

    the limited investment capacity of these operators

    technology in terms of better vehicles (average age of

    trucks in India is over 10 years), tracking, safety etc.

    has been slow to percolate.

    Multiple check points: Trucks in India have to pass

    through multiple check points in their journey. Trucks

    have to stop at state borders, for payment of toll

    taxes, for RTO inspections, Octroi etc. An estimate

    of the time taken at the check points shows that ina journey of 2150 kilometers between Kolkata and

    Mumbai a truck had to stop for as much as 32 hours

    at various checkpoints on 26 different locations.1

    In addition to roads and railways which carry the bulk

    of freight traffic in India other modes of freight carriage

    also suffer from their own issues.

    0.00

    0.50

    1.00

    1.50

    2.00

    2.50

    1990-91 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

    R

    ate

    in

    USDc

    ents

    Source: Indian Railways

    Freight rate increase

    Average rate per passanger km. Average rate per ton km.

    1Presentation by Mr. K Rajkiraon Logistics in India on 10th

    August, 2009

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    The ports sector in Ind ia suffers from several issues:

    High turnaround times: Data from Indian Ports

    Association shows that ports in India suffer from high

    turnaround times for ships. JNPT, which is the premier

    port in India, has more than 2 times the turnaround

    time of Colombo and Singapore ports because of

    congestion on berths and slow evacuation of cargo

    which are unloaded at the berths.

    Inadequate depth at ports: The depth at many ports

    in India is not enough and dredging tenders take a

    long time in getting awarded. As a result with theexisting depths many ports are not able to attract very

    large vessels.

    Costal shipping has not taken off: Costal shipping

    in India is hampered by inadequate port and land side

    infrastructure which hampers large scale use of it for

    freight movement.

    Finally Air cargo has also not taken off significantly in

    India. With increased volumes of cargo major airports

    are getting congested resulting in long waiting time. The

    waiting time for exports in India is 50 hours compared

    to a World average of 12 hours while the waiting

    time for Imports in India is 182 hours compared to a

    World average of 24 hours. Also the airfreight sectorsuffers from high fuel costs and tariffs as well as several

    manpower issues.

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    Storage infrastructure related challenges

    In addition to the poor transportation infrastructure

    the storage infrastructure in India also needs significant

    improvement.

    State of ICD/CFS is poor:The ICD/CFS infrastructure

    available for EXIM trade is inadequate. The land

    requirement for setting up ICD/CFS at an appropriate

    place is difficult to come by as several hurdles have

    to be cleared in the consolidation of land. As a result

    many logistics companies with an interest in setting up

    ICD/CFSs eventually fail to do so, mostly on account

    of lack of land availability at an appropriate place.

    While it is difficult to set up a facility, at the same

    time, the existing facilities themselves are plagued

    with several issues:

    Many of the older facilities today are located

    within city boundaries restricting day movement of

    trucks

    The approach roads to the facilities are poormaking evacuation of cargo difficult

    Most facilities have issues of inadequate parking,

    lack of available land for expansion, paving etc.

    State of warehousing is poor: Various estimates put

    warehousing costs to be between 20-25% of the total

    logistics cost. Despite this the state of warehousing

    in India is largely dismal. On the warehousing front

    80-85% of warehouses are traditional with sizes

    of less than 10,000 square feet. Most of these

    warehouses are not leak proof, equipped with security

    systems, racking facilities and other facilities. Majorityof the operators of these warehouses are also small

    to mid-sized entrepreneurs with limited investment

    capacity. The only really large warehousing owners are

    government agencies including Central Warehousing

    Corporation and State Warehousing Corporations, but

    the focus of a significant majority of the government

    warehouses is food grain storage.

    Not only are the existing warehouses of poor quality,

    there are also not enough of them. This is because

    land availability for warehousing at an appropriate

    place and at an appropriate price is a concern.

    The magnitude of the problem in this regard was

    highlighted in a recent CII conference on warehousing

    where it was highlighted that Delhi alone has a

    deficit of 9000 acres of land for development of

    warehousing facilities!

    0 10 20 30 40 50

    Colombo

    Rotterdam

    Hongkong

    Singapore

    JNPT

    Source: IPA data

    Turnaround time at ports in hours

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    State of cold storages is poor: Despite thesignificant requirement of cold storages from the retail

    sector, pharmaceutical and chemical sector and the

    farm sector, where it is estimated that upto 40% of

    the fruits and vegetables grown in India gets wasted,

    the sector needs to grow much faster to meet the

    needs. Estimates on cold chain facilities in India put

    the number of cold storages at around 5400 with a

    capacity of 24 million metric tons. However nearly

    60% of these facilities are meant for storage of potato

    crop. Also with the poor electricity condition in the

    country the cost of operating such facilities is very

    high. With government intervention and various sopsthe situation is slowly improving but many challenges

    remain.

    Multimodal Logistics parks yet to take off: With

    emerging requirements of integrated logistics,

    provision of transportation hub, value addition etc.

    large logistics parks were sought to be developed.

    However as with other areas the number of such

    facilities continues to remain much less than the

    requirement. Consolidation of large land parcels is a

    significant issue hampering their development. Other

    issues include the lack of recognition of the concept of

    logistics park by state government thereby obtaining

    permission for setting up one cumbersome.

    Tax structure related challenges

    A complicated tax regime is in place which places

    several challenges on the logistics industry. Payment of

    multiple state and central taxes results in:

    Considerable loss of time in transit for road freight in

    order to pay such taxes

    Fragmentation of warehousing space especially for

    low margin products thereby providing a disincentive

    to create large integrated warehousing spaces

    A uniform tax structure to be introduced through the

    GST is being highlighted as a panacea for the existing

    situation. If implemented in spirit GST will enable

    logistics services to be provided without considerationfor tax boundaries. However while the introduction of

    GST looks fairly certain several companies have already

    started raising doubts about the final shape the bill will

    take, given the deep divisions between several state

    governments and the central government on the issue.

    Technology and Skills related challenges

    The logistics industry is also hampered by low rates

    of technology adoption and poor skill levels. On the

    technology front the industry now seems to be paying

    serious attention with use of RFID, vehicle tracking

    technologies, warehouse management systems etc.However while acceptance is perhaps not an issue any

    more, the marriage between IT and domain requirement

    needs to be resolved. Automation in processes is still

    only in its infancy. Further progress is dependent on a

    certain level of standardization which is made more

    difficult by the high level of fragmentation in the

    industry. This is a drawback that needs to be tackled

    early.

    In addition to technology-related issues the skill levels

    of in the logistics industry also require to be upgraded

    urgently. As of now courses focusing on logistics

    industry remain few and far between. Also logistics

    industry is still not looked at as the industry of choice

    for young graduates thereby making hiring of quality

    professional manpower challenging. On the ground

    level too there are challenges. A recent study has

    found that a variety of skills are required in the sector.

    These include technology skills, driving skills including

    safety procedures, industry understanding and multi-

    operations skills. The present state of affairs is illustrated

    by example of truck driver in India, who is a critical point

    of contact for the logistics company with its customers

    where the truck drivers today find it difficult to

    accurately record delivery records, understand deliverydocuments, negotiate for return business, handle

    queries etc.

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    III. The way forward

    The growth in the Indian economy in coming decade

    is likely to be driven by the increased activity in the

    manufacturing and retail sectors. To enable these sectors

    to contribute effectively to Indias growth the logistics

    sector will have to step up to provide value-enabling

    solutions for these sectors. This would require action on

    three fronts:

    Creating an environment for graduating the Indian

    logistics market to provide value propositions in

    logistics solutions

    Increasing the capability of the Indian Logistics

    Industry to provide such solutions

    Requiring Government and other regulatory

    mechanisms in the country to provide an enabling

    environment for value propositions in logistics services

    Due to decades of growth and increasing globalization

    of the Indian economy Indian entrepreneurs become

    active participants in business strategy issues which

    can take their business forward and make them

    competitive. However old habits die hard. Therefore

    we still see numerous instances where little premium

    is put on service delivery, quality and transparency in

    logistics services. Demand for logistics solutions still

    gets conditioned by an undemanding, quality-neutral

    client used to a non-standard product and service

    deliveries. Large logistics departments have come up

    within companies to manage this chaos and lowest

    price frequently becomes the watch word for many

    companies rather than quality of the solution provided.

    For instance, dust-proofing at a storage place still does

    not command the kind of premium in India that it

    should, and as a result, the logistics service provider

    does not invest in such provisions. After-sales service

    gets lost in a retail logistics maze, and the client finds

    local suboptimal solutions. This is routine today. Some

    change in certain specific product ranges do seem to

    be happening, but at a very high price. Once such value

    additions begin to get recognized and priced in value

    terms, the logic of the Logistics industry will undergo asea-change.

    The Logistics industry assesses client needs in practical

    terms. Most logistics companies do not have the

    financial wherewithal to put in world class facilities

    upfront and wait for the returns to be realized at a later

    date through an education of the customer. Therefore

    a logistics service provider today gives exactly the service

    that is demanded of him. This is perpetuated by the

    fact that today a logistics company can set up business,

    offer base level service and make money, albeit with

    low margins because there is limited differentiation.Capabilities and skills are neither available nor do the

    customers currently demand them. The vicious circle of

    inadequacy and incompetence in supply and demand is

    self-propagating. There are stray instances of one supply

    chain streaking out of its orbit, but the risk perception in

    such ventures is high and generally discouraging.

    However the ray of hope is that perceptions seem to be

    changing. The reason behind the changing perceptions

    appears to be mainly that supply side pressure seems

    to be growing faster than the demand side in so far as

    logistics services are concerned. Increasing competition

    is forcing manufacturers and retails to increasingly

    differentiate their products. One of the way through

    which differentiation is being made is through the

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    supply chain strategies. Today for example, mastering

    the rural supply chain and making company products

    available in every corner shop in a rural area is becoming

    a business imperative for most retail products. This

    is because the pace of growth of markets in rural

    areas is handily beating those in urban centers. With

    such pressures the customers of logistics services are

    becoming ever more demanding. This is resulting in

    the capability and the inclination of the Indian Logistics

    industry to experience a change, which might be

    slow but is deliberate. The Indian market still remains

    extremely cost-conscious, and tolerant towards logistical

    mishaps, even misdemeanors but positive signs are

    being seen.

    However this change may still be nipped in the bud

    if no efforts are made by the Government and its

    associated regulatory mechanisms to provide an

    enabling environment to facilitate a paradigm shift in

    how logistics industry can grow unfettered. It is well

    recognized that government is making efforts to makeimprovements to correct the infrastructure deficit- be

    it in physical transport, warehousing and terminal

    infrastructure etc. However while physical capacity

    creation is being facilitated, albeit slowly, there are other

    softer changes that are required to be made along with

    the capacity creation drive to realize the full impact of

    such changes. These include:

    Coordination in infrastructure planning: Today

    there seems to be no coordination amongst the

    various agencies of the government in creation of

    infrastructure. If creation of additional port capacity

    for container handling is being planned little thoughtis given to evacuation logistics. When main network

    roads are developed the l inks remain of poor quality.

    To improve the situation requires a change in our

    planning mindset. Coordination in infrastructure

    planning will need to happen not only to truly

    remove bottlenecks, but also to avoid overlap and

    attendant extra costs. Such resultant integration of

    facilities will help to reduce the high transaction costs

    prevalent in the economy.

    Improvements in tax regimes: Tax regimes and

    recovery procedures continue to be cumbersome

    and time consuming. There remains great

    uncertainty about the actual coming in of GST and

    the final shape in which it will come. However for

    improvement in logistics it is critical that tax regimes

    need to be simplified and reduced to a one- window

    /one- time levy across regions so that administrative

    processes do not hinder physical free flow of

    movement.

    Reforms in urban planning: Urban planning

    today does not appear to factor in the enormous

    volumes of goods distribution catering to urban

    conglomerations in terms of road and peripheral

    infrastructure resulting in traffic restrictions and

    serious bottlenecks and logjams. This needs to be

    paid special attention by our planners.

    Improving dialogue with industry: Finally the

    regulatory agencies do not facilitate proactive and

    participative dialogue with the industry. Blueprints

    and policy regulations today are a largely one-sided

    affair with some industry representations sought.This makes policies prone to avoidable trial and error

    events.

    The future Of the Indian Logistics Industry lies ultimately

    in value propositions for the customer. Value solutions

    can be engineered only if the complex strands of

    supply-chain mesh together seamlessly. These solutions

    are expected to command a premium but also come at

    a cost. The cost conscious Indian Market first has to

    be made to appreciate the value of premium services.

    In a supply driven market, supply chain solutions need

    to unlock the cost -saving aspect of efficient logisticsservices first. This would result a reduction in cost

    down the line, which can only happen when most

    of the deficiencies mentioned above are removed.

    Logistics companies can leverage further economies

    of scale when operations are expanded. This may

    require industries to collaborate with logistic service

    providers to nurture their businesses, possibly in a

    way the automobile industry in India nurtured the

    auto-component companies. The future is bright for

    the logistics industry in India- the expectation is that

    a tipping point for the industry will soon be reached

    which will propel it to greater heights.

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    Contacts

    Amrit Pandurangi

    Senior Director

    Direct: +91 124 679 2890

    E-mail: [email protected]

    Vishwas Udgirkar

    Senior Director Consulting

    Direct: +91 124 679 2319

    E-mail: [email protected]

    Peeyush Naidu

    Director Consulting

    Direct: +91 124 679 2401

    E-mail:[email protected]

  • 8/12/2019 Logistics Sector-Present Situation and Way Forward

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