Need for an orchestrator

Shashi Kiran Shetty says technology has come in handy in the absence of a workable policy framework.

Logistics links shipping, finance, commerce and trade, transportation, aviation and railways. The policy framework we have today addresses each of these links through a different ministry or policy­making process. For logistics as a sector to be successful, grow and help the GDP multiply, it is important to have consistency in the policy across all of these areas. There is an urgent need for an independent agency that can act as a single body or authority to look into all the aspects of policy framing, implementation and other operational and regulatory aspects of the whole logistics sector in alignment with all the stakeholders who are directly or indirectly related to logistics sector, and enable a uni­form policymaking framework for the industry.

Attention to infrastructure related issues: There are enormous delays in awarding port infrastructure contracts because of environmental, dredging or other issues. The model of revenue share is a big question of debate as lot of domestic and foreign terminal operators and investors are finding this unviable. The benefits derived from revenue share are not passed on to the end users, and there is no focus on bringing down the tran­saction cost, this makes the industry uncompetitive.

Market driven framework: The role of TAMP should be more on improving the policy framework by addressing trade concerns and not related to the tariff and commercials. Tariff should be market-driven to make the activity investor-attractive.
On the Railways front, the pace of private parti­ci­pation in container train operation has been slow. The Private Container Train Operators (PCTOs) have been facing constant intervention of the Indian Railways in determining the freight and haulage rates and lack of clarity on objectives and project structuring have been the key reason for limited private sector participation.

Further the identification of stakeholders is not through competitive bidding. PCTOs have to face issues like infrastructure bottlenecks (including inadequate load­ing and unloading facilities), inability to access gov­ernment sidings and facilities and congested railway lines. All these have deterred players from entering into the rail freight segment. Hence there is an urgent need for some positive moves by government in terms of revising the MCA (after five years of operation).

The PCTOs are expecting a better understanding and policy framework for them to operate in a financially viable manner. Support to new offerings: Initiatives that can be taken in coastal and inland shipping could include zero duty on fuel, making bunker charges more economical, priority berthing on all the ports, low port calling charges, exemption of service tax on transportation of goods through coastal shipping or inland waterways.

There has been some consolidation creating larger players. There is also strong investment in technology. The industry is constantly looking for ways to deliver better value, tracking and tracing systems, RFID tech­nology and electronic data interchange are some areas which is helping the sector reduce documentation and other costs. Where policy has failed, technology has come to some aid.

There is a strong need to orchestrate all the allied ministries and policies with the ultimate intention of making India competitive in the global market. Logistics enables commerce and the movement of most essential goods in the country. It is fair expectation to have a single portfolio under one ministry that looks at the investment and policy framework for logistics. We need a conductor who can thread it together.

The author is Chairman and Managing Director, Allcargo Logistics.