{"id":49918,"date":"2019-07-16T19:00:55","date_gmt":"2019-07-16T13:30:55","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?p=49918"},"modified":"2019-07-16T16:18:55","modified_gmt":"2019-07-16T10:48:55","slug":"7-pm-a-cargo-of-cash-puts-logistics-in-high-gear-16th-july-2019","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/7-pm-a-cargo-of-cash-puts-logistics-in-high-gear-16th-july-2019\/","title":{"rendered":"7 PM | A cargo of cash puts logistics in high gear |16th July, 2019"},"content":{"rendered":"\n<p><strong>Context:<\/strong>\nlogistics sector and its impact on Indian economy<\/p>\n\n\n\n<p>Logistics is an integral activity for\neconomic growth as it involves the management of flow of goods from place of\norigination to place of consumption. The sector comprises shipping,\nport-services, warehousing, rail, road and air freight, express cargo and other\nvalue added services. Over the last two decades, the Indian logistics sector\nhas evolved from mere transportation services to fully integrated service\nproviders.<\/p>\n\n\n\n<p><strong>Scope\nand need of the logistics sector in India:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Growth:<\/strong> The\ngrowth of economy and logistics sector goes hand-in-hand. The Logistics\nsector in INDIA has today become an area of priority. One prime reason for the\nsame stems from the reason that years of high growth in the Indian economy have\nresulted in a significant rise in the volume of freight traffic moved. So the\nfuture growth target of Indian economy is nearly 8%, to achieve this growth\nlogistics sector will be the key.<\/li><li><strong>Employment potential:<\/strong> According to Economic-survey 2017-18, The Indian logistics industry which provides\nemployment to more than 22 million people has grown at a compound annual growth\nrate (CAGR) of 7.8 per cent during the last five years. The logistics sector\nwill be the sunrise sector for providing employment opportunities to growing\nworkforce.<\/li><li><strong>Logistics performance index<\/strong>: The Global Ranking of the\nWorld Bank&#8217;s 2016 Logistics Performance Index shows that India jumped to 35th\nrank in 2016 from 54th rank in 2014 in terms of overall logistics\nperformance.&nbsp;India has improved its rank in all the six components of\nlogistics performance index. So there is still scope to improve the ranking.<\/li><li><strong>Agriculture sector:<\/strong> The annual value\nof harvest and post-harvest losses of major agricultural produces at the\nnational level was of the order of Rs 92,651crore. This is more than the loan\nwaivers announced recently. The main reason behind the loss is lack of storage\nand transportation facility in the country. While the government has been\nworking on improving the road network in the industry, storage and warehousing\nfacilities were not being created at the same pace.<\/li><li><strong>Green\nsupply chain management:<\/strong> Logistics companies in India are waking up to the global\ntrend of offering green services to their customers and are showcasing what\nthey do to reduce their carbon footprint. In India, the sector accounted for\nseven per cent of GHG emissions in 2007, and this is expected to double to 14\nper cent by 2025, according to the Environment Ministry. So for the sustainable\nfuture need to focus on logistics sector.<\/li><\/ul>\n\n\n\n<p><strong>Challenges of logistics sector in India:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Transport related challenges: <\/strong><\/li><li>In India road\nhas become predominant mode of transportation of freight cargo. Estimate of the\nmodal movement of cargo highlights that in India nearly 60.2% of the cargo is\nmoved by road, 32.1% by rail, and rest by the coastal shipping, airways and\ninland waterways. Pipelines constitute a very minor proportion. It is\nrecognized that movement of long haul bulk traffic by road is less efficient\nthan by rail.<\/li><li><strong>Port sector: <\/strong>High turnaround times- Data from Indian\nports association shows that ports in India suffer from high turnaround times\nfor ships. JNPT, the premiere port in India, has more than two times the\nturnaround time of Colombo and Singapore ports because of congestion on berths\nand slow evacuation of cargos unloaded at berths.<\/li><li><strong>Storage:<\/strong> State of cold storages is poor- Despite\nthe significant requirement of cold storages from the retail sector, pharmaceutical\nand chemical sector and the farm sector, where it is estimated that up to 40%\nof the fruits and vegetables grown in India gets wasted, receptor needs to grow\nmuch faster to meet the needs.<\/li><li><strong>Lower standardization:<\/strong> India&#8217;s\nlogistics market has been impacted by lower standardization of cargos and\ncontainerization of logistics traffic, hampering the overall speed and thus\nincreasing cost of movement.<\/li><li><strong>Skill related challenges<\/strong>: As\nnow courses focusing on logistic industry remain few and far between. Also logistic\nindustry is still not looked at as the industry of choice for young graduates\nthereby making hiring of quality professional manpower challenging.<\/li><li><strong>Project delays\nand over runs:<\/strong>\nAs many as 369 infrastructure projects, each\nworth Rs 150crore or above, have shown cost overruns to the tune of over Rs\n3.58lakhcrore owing to delays and other reasons. The brief reasons for time\noverruns as reported by various project implementing agencies are delays in\nland acquisition, forest clearance and supply of equipment. This led to logistics\ncosts in India are one of the highest, at around 14 percent of GDP.<\/li><\/ul>\n\n\n\n<p><strong>Government measures related to logistics sector in India:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Infrastructure\nstatus:<\/strong> While the government has been working on improving the road\nnetwork in the industry, storage and warehousing facilities were not being\ncreated at the same pace. &nbsp;So the\ngovernment has granted infrastructure status to the logistics sector, including\nmulti-modal logistics parks and cold chains. Infrastructure status for cold\nchains and warehousing facilities will provide a big boost to attracting\nprivate investment in this sector as the cost of funding it will be at a\nconcessional rate and the players will have multiple instruments to raise the\nmoney through.<\/li><li><strong>Initiatives by government:<\/strong><\/li><li><strong>Bharatmala<\/strong> <strong>project<\/strong>: is a\nnew umbrella program for the highways sector that focuses on optimizing\nefficiency of freight and passenger movement across the country by bridging critical\ninfrastructure gaps through effective interventions like development of\nEconomic Corridors, Inter Corridors and Feeder Routes, National Corridor\nEfficiency Improvement, Border and International connectivity roads, Coastal\nand Port connectivity roads and Green-field expressways.<\/li><li><strong>Sagarmala\nproject:<\/strong> The Sagarmala initiative will address\nchallenges by focusing on three pillars of development, namely (i) Supporting\nand enabling Port-led Development through appropriate policy and institutional\ninterventions and providing for an institutional framework for ensuring\ninter-agency and ministries\/departments\/states\u2019 collaboration for integrated\ndevelopment, (ii) Port Infrastructure Enhancement, including modernization and\nsetting up of new ports, and (iii) Efficient Evacuation to and from\nhinterland.&nbsp;<\/li><li><strong>Dedicated\nfreight corridors:<\/strong> The Dedicated Freight Corridors (DFC) will\nincrease the speed of transportation through railways which compete with roads\nfor the same freight. National highways constitute just two percent of the\ncountry\u2019s road network but carry 40 percent of the traffic load; thus a better\nrail network will help reduce road congestion. Along this network, the\ngovernment has planned to set up 34 mega logistics parks at investments of more\nthan Rs 1lakhcrore. The Centre will take up projects in partnership with state\ngovernments and private companies. The government expects the Indian logistics\nsector to grow to USD 360 billion by 2032 from the current USD 115 billion.<\/li><li><strong>Goods\nand Services Act:<\/strong> According to the rating agency\nICRA, post GST implementation the savings in terms of truck turnaround time has\nbeen approximately 18-20 per cent. GST streamlined the process, by subsuming\nlot local taxes like Octrai which led to speed movement of goods and services.<\/li><li><strong>Policy\nframework:<\/strong> The Indian government has announced that it is\nworking at the policy in order to set up new logistics plan in the country. The\nintention is to devise the most cost-effective method to transport goods by the\nyear 2035. The\npolicy aims at preparing a proper integrated logistics plan. The new logistics\ndivision within the department of commerce is working on this national\nintegrated plan, with the objective to identify and iron out any existing\nbottlenecks and gaps in the industry.<\/li><\/ul>\n\n\n\n<p><strong>Way forward:<\/strong> The future of the Indian Logistics\nIndustry lies ultimately in value propositions for the customer. Value\nsolutions can be engineered only if the complex strands of supply-chain mesh\ntogether seamlessly. t. The cost-conscious Indian market first has to be made\nto appreciate the value of premium services first. This would result a\nreduction in cost down the line, which can only happen when most of the\ndeficiencies mentioned above are removed. Logistics companies can leverage\nfurther economies of scale when operations are expanded. This may require\nindustries to collaborate with logistics service providers to nurture their\nbusinesses, possibly in a way the automobile industry in India nurtured the\nauto-component companies. The future is bright for logistics industry in India-\nthe expectation is that a tipping point for the industry will soon be reached\nwhich will propel it to greater heights.<\/p>\n\n\n\n<p>Source: <a href=\"https:\/\/www.business-standard.com\/article\/economy-policy\/a-cargo-of-cash-from-private-equity-investors-puts-logistics-in-high-gear-119071501463_1.html\">https:\/\/www.business-standard.com\/article\/economy-policy\/a-cargo-of-cash-from-private-equity-investors-puts-logistics-in-high-gear-119071501463_1.html<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: logistics sector and its impact on Indian economy Logistics is an integral activity for economic growth as it involves the management of flow of goods from place of origination to place of consumption. The sector comprises shipping, port-services, warehousing, rail, road and air freight, express cargo and other value added services. Over the last&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/7-pm-a-cargo-of-cash-puts-logistics-in-high-gear-16th-july-2019\/\">Continue reading <span class=\"screen-reader-text\">7 PM | A cargo of cash puts logistics in high gear |16th July, 2019<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":49370,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130,9],"tags":[],"class_list":["post-49918","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-7-pm","category-public","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2019\/07\/7-PM.png?fit=1000%2C500&ssl=1","views":{"total":0,"cached_at":"","cached_date":1704765405},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/49918","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=49918"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/49918\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/49370"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=49918"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=49918"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=49918"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}