Ability of an organization to compete effectively in global markets is mainly determined by the quality, the price and the speed of delivery of goods and services from producer or provider to consumer. And competition forces businesses to operate at highest possible efficiency levels across functions to avoid losing market share to competitors. That efficiency is the competitive edge businesses ride on to success. A slew of experts and executives have established that supply chain is central to business success and logistics is the competitive edge. It is then a forgone conclusion that supply chain and logistics are the major focus areas for all innovations and improvements for business and economic growth. Hence for investments too. India, being the fastest growing economy and a dominant player in global business environment, requires its supply chain and logistics infrastructure to brace and pace its growth.
The statistics, at least, of investment plans in logistics wholeheartedly support this pace of growth. According to Economic Survey 2017-18, India’s logistics industry, growing at a CAGR of 10.5 per cent, is likely to jump from worth around USD 160 billion to USD 215 billion in the next two years with implementation of GST (Goods and Services Tax). For this second-biggest road network in the world, spread over 5.4 million km, Indian Prime Minister justifiably approved an investment plan of about INR 6.97 trillion (USD 108 billion) to augment road infrastructure. To attract more investments and credit at competitive rates, Government gave infrastructure status to logistics sector widening its scope over transport. Under the huge programme for highway and road construction, Bharatmala Pariyojana estimated to cost around INR 5.35 trillion (USD 82.9 billion), Government plans to build more than 83,667 km of roads over the next five years. A further INR 1.57 trillion (USD 24.3 billion) will be spent on constructing additional 48,877 km of roadways. These will stretch across 50 corridors connecting over 24 logistics parks through 550 districts by minimum 4-lane highways accommodating 70-80% of freight. About 185 choke points are identified and major interventions planned include 28 ring roads, 45 bypasses and 34 lane expansions. For comprehensive development of India’s coastline and maritime sector, another huge plan under Sagarmala Programme was launched at an estimated INR 8.5 trillion (USD 120 billion) investment for new port development, modernization of ports, development of 14 Coastal Employment Zones (CEZs) and Coastal Employment Units, enhancement of port connectivity and coastal community development. This projects merchandise exports to jump by USD 110 billion and jobs to cross 10 million.
These are sizzling statistics. However, statistics by themselves cannot understand, let alone solve, the perennial problems in logistics India continues to battle. Statistics only help analyze data, not necessarily address the ground realities. That is why problems in logistics seem so prolonged despite the huge investments and projects. No doubt they are practical problems, but a big lot of them are deeply entrenched in behavioural blockages. They act as dogmatic deterrents obstructing growth of business in India. They can all be solved with a resolute resolve and equipment of education.
There are various recommendations made around overcoming these problems. Some suggest filling investment gaps through advanced contracting models, while others suggest building technology platforms and some others suggest government facilitating industry rather than capping pricing to reduce cost.
While lack of proper government planning, administration and policy-making for logistics infrastructure development could explain the high cost and inefficiency of logistics, the problem is certainly one of shared responsibility by government, industry and individual citizens or groups. Within the political and procedural constraints in a typical governmental setup, the massive investments, historically huge budget outlays and structured programmes launched by Government clearly set the direction of progress in logistics sector. However, there is tremendous scope for what the others – industry and citizens – could do to substantially boost pace of progress. What is being planned and done is the way to go, but for all contributors and benefactors, there is yet a long way to go.
Let us continue treading. Through the blogpost to follow.