India needs to revamp its logistics infrastructure as the country suffers a loss of US$65 billion every year owing to poor logistics services .jpg) According to a report jointly brought out by the Confederation of Indian Industry (CII) and Amarthi Consulting, India suffers a loss of US$65 billion every year due to poor logistics services. The report also states that the country suffers this loss due to high logistics costs, which is about 12-13% of the country’s GDP as compared to 7-8% in developed countries. Industry insiders believe that lack of industry status and handling of different verticals in the sector by different ministries lead to high logistics costs in the country.The CII-Amarthi report states that since independence the network capacity of Indian Railways has been increased only 20%, whereas traffic has increased almost 10 times since 1947. Indian rail network, which stood at 53,596 km in 1950s reached to only 64,015 km in the next 58 years, growing at an annual average rate of only 180 kms.
Issues leading to poor logistics facilities
“Issues related to land acquisition contribute to poor logistics facilities in India. Lack of transparency in land acquisition leads to delay in the implementation of several projects, which could otherwise step-up the country’s logistics infrastructure. Poor connectivity to ports leads to congestion, causing increase in turnaround time for ships,” comments Winston Vinod Kumar, manager at Geo Logistics, a mid-sized logistics firm in Bengaluru.
Notably, a report titled ‘Transforming the nation’s logistics infrastructure’ brought out by McKinsey & Company in July 2010 stated that the country needs to spend US$500 billion over the next 10 years to improve upon its logistics infrastructure.
“Several sectors such as pharma, retail, manufacturing, food processing etc are dependent on the logistics sector for transportation of goods, proper storage facilities, cold chains and others. Inadequate logistics facilities also hamper growth of these sectors,” comments Raj Jaiswal, proprietor of Raj Transport, a mid-sized transportation firm in New Delhi.
With the Indian economy clocking a growth rate of over 8% in the first quarter of the ongoing fiscal, it is high time for India to improve upon its existing logistics infrastructure.
Arup Choudhury
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