Experts believe that to boost the country’s logistics sector it is imperative to build robust infrastructure and cold chain facilities, which at present are in abysmal and outdated condition

On the sidelines of a seminar hosted by the Confederation of Indian Industry’s (CII) Institute of Logistics in Hyderabad last week, experts have pointed out the major roadblocks in the growth path of the country’s logistics sector. The hurdles that have been identified are lack of proper railway and road infrastructure and inadequate warehousing and cold chain facilities, among others. Analysts opined that with sectors such has retail, pharma, fast moving consumer goods etc increasingly availing the services of third party logistics service providers, the required fillip is being provided to the logistics sector. According to K Mohanty, managing director of Highrise Logistics, a small-sized logistics firm in Kolkata, “With the entry of global players in the country’s logistics sector, competition is set to rise manifold in the coming days. Therefore, to retain the existing client base it will become absolutely vital for domestic logistics players to meet stiff deadlines for which having a robust infrastructure is an absolute necessity.”

Robust infrastructure to aid growth in freight traffic

Proper infrastructure is not only required to spur growth in the sector but is also vital in boosting freight traffic. It is expected that freight carried by roadways and railways is going to witness a significant growth over the next 3 years. “With industrial production witnessing significant growth, pressure on rail and road transportation is bound to increase. Moreover, with the market on a revival mode post the global economic meltdown, logistics operators are now getting more and more consignments. In order to support the increasing freight traffic, it is vital to upgrade the existing transportation facilities,” comments Dev Desai, proprietor of Aniket Logistics, a small-sized logistics firm in Mumbai.

Inadequate cold storage facilities

Lack of proper cold storage facilities act as a major bottleneck for the sector. According to a study by the Federation of Indian Chambers of Commerce and Industry (FICCI), around 30-35% of fruits and vegetables produced in the country are wasted owing to lack of adequate cold storage facilities.

“In order to preserve perishable items like fruits and vegetables, it is vital to construct good number of cold storages in the country,” says, Rohit Mehta, director of Fabric Logistics, a mid-sized logistics firm in Hyderabad. Meanwhile, CII has estimated that to meet the growing demand for adequate cold storage facilities, investments worth Rs 18,000-20,000 crore is required over the next 5 years.

Analysts believe that it is essential to encourage domestic and foreign private players to ramp up investments in these areas in order to boost the sector.  In this context, Krishna Memon, director of Infra Logistics, a small-sized logistics firm in Cuttack, says, “The government should come up with plans to entice more private players to foray into the logistics sector. Coming of private players will increase the efficiency and productivity of the sector.”

It is expected that 100% foreign direct investment to set up cold chain facilities and 16% concession in excise duty on cold storage refrigeration equipment will lure international cold chain players and equipment suppliers to venture the domestic market.

Arup Choudhury