INTERNATIONAL TRADE LOGISTICS ASSIGNMENT 1

Anshul Kothari (10B)

Steps urgently required to improve logistics performance

productivity and cost efficiency in India
The logistics sector, one of the most robust industries currently in India, is
expected to grow at a CAGR of 12.17% by 2020, because of growing
manufacturing, retail, FMCG as well as ecommerce industries. Moreover, the
country spends approximately 14.4% of its GDP on logistics and
transportation which is much higher than what other developing countries
spend (8% of its GDP). This indicates how important the logistics is in a
country like India.
Challenges of the Logistics sector
Even though logistics is one of the fastest growing sectors in the country, it is
plagued by some of the following challenges:
1. Complex organizational structure: The logistics sector comprises of
different
segments
like
shippers, logistics service
providers, logistics hubs as well as regulatory bodies. With some
transitioning from one point to another, the chances of faltering are
high as well. As a result, you can never really guarantee end-to-end
satisfaction to the customer.
2. Poor quality infrastructure: For a country like India which is the
seventh largest country in the world and covers an area of 3214 kms
from North to South and 2933 km from East to West, logistics is a
complex process. Adding to this, is the poor infrastructure in the
country - poor road network, high air freight charges, massive
turnaround time at sea ports etc.
3. Less technology adoption: Indian logistics sector is still far from
leveraging technology in the real sense when it comes to boosting
operations. Across many tier 2 and tier 3 cities, logistics processes are
still done manually - right from weighing the package to
documentation.
Areas of improvement

Implementable IT solutions: It is important that IT engineers build

products and solutions which are easy to use, easy to comprehend and easy
to adopt as well. For instance, an IT solution for the logistics sector has to be
such that even drivers can comprehend easily since we cannot expect
people from that segment to be tech savvy and understand the entire IT
functionality of the solution.
Improvements in tax regimes: Tax regimes and recovery procedures
continue to be cumbersome and time consuming. There remains great
uncertainty about the implementation 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: Special attention needs to be paid to urban
planning which 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.
Improving dialogue with industry: The regulatory agencies do not
facilitate 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.