While acknowledging the bottlenecks, Shashi Kiran Shetty, Founder and Chairman, Allcargo Logistics, expects that positive governance will bring a new wave in the Indian logistics industry.
Do you think the business climate or ease of doing business has improved?
Absolutely, the market sentiments, positive inflow of investments from foreign investors, endorsement of global banks and funds of India´s opportunity are few of the results of a more focussed and prodevelopment leadership at the Centre. As far as ease of doing business is concerned, it is a holistic initiative wherein every stakeholder, i.e., Centre, state as well as private players, will have to commit for a change of both policies as well as mindset.
Although about 13 per cent of the GDP is spent on developing logistics frameworks, why has the sector seen dismal growth rates?
Similar to any industry in a growing economy like India, the logistics sector also has numerous challenges. What the logistics industry has achieved over the years is quite remarkable, given the challenges. There will always be scope for improvement in infrastructure at ports, road and rail connectivity to ports for seamless entry and exit of cargo, more efficient document clearance system and others. But the way the economy is growing, these will definitely be put in place sooner rather than later.
Despite a network of roads, rail, over hundreds of airports, 13 major and 200 non-major ports, what are the factors due to which the sector has not been able to provide last mile connectivity? What should be done to achieve it?
The last mile connectivity presently operating in the system has tremendous scope for improvement, but that does not mean it has not provided the backbone for growth. It surely has. Now, with increased pace of development, the infrastructure connectivity also needs to keep up with economic growth, to provide a seamless end-to-end value chain. The requirement is to look at EXIM as well as domestic trade, i.e., markets and consumption in a holistic manner. The variables have to be connected to understand which region- ports, market, products, hubs- needs more robust entry and exit routes to facilitate last mile connectivity. Given the demography of our country, our challenges are also unique. Thus, our solutions should also be customised to our needs and that of the economy.
Why does cold chain, one of the highest growing markets, constitute a minor proportion of the logistics industry?
Indeed it is one of the fastest growing segments and particularly in India it will play a crucial role as we move forward. But it will have to be in tandem to products requiring these facilities, especially food and related products. As our economy is growing, this infrastructure is on its way in terms of adaptation as well as being funded by both private as well as public entities.
What would be the impact of Goods and Services Tax (GST) Bill on the warehousing and logistics industry?
GST is an important policy not only for any individual companies, but also for our entire nation and its economy. If India wants to be a global hub for trade and commerce, we need to have a more comprehensive but seamless policy. GST will certainly help in boosting the economy and taking it to its potential of fast-paced growth. Logistics is the backbone of India´s economy and thus it will directly benefit from more seamless exports and imports to and from India.
Efficiency in the logistics value chain will give more opportunities for trade to flourish and thus it will benefit the entire sector.
To what extent has the ´Make in India´ campaign helped the sector? Will it help to generate momentum?
The vision of ´Make in India´ has laid the foundation for our country, including public and private enterprises, to change our mindset. It will need a consistent change in policies, framework, technology development and skills development over the coming years to actually make the contribution it is expected to chip in with. These are early years in the vision. It needs more time and investment from all stakeholders to show the results on the ground and in action. This also includes the EXIM trade of India.
What opportunities do you envisage for the sector in fiscal 2015 and beyond, particularly with e-commerce growing really rapidly?
Logistics is the backbone of India´s economy. With a more focussed and decisive government at the centre, India will witness a more sustained and fast-paced growth in the coming years. Logistics will definitely benefit from the positive growth. GST will play a crucial role in facilitating one of the variables of ease of doing business. ´Make in India´ will be a driver for companies to focus more on manufacturing and technology development in India itself; many such initiatives will surely benefit the sector immensely in the coming months and years.
What are your expectations from the government for the sector?
The government has taken the right initiatives to give the economy and our country the base to scale all opportunities by focussing on infrastructure, ease of doing business, ´Make in India´ vision, more focus on skills development and positive sentiment for investors. We would expect them to implement the plans at the earliest to give a new fillip to this growth. Especially for the logistics sector, GST as well as connectivity to ports, including roads and rail connectivity will tremendously boost the logistics value chain. Most importantly, coastal shipping will play an important role in making logistics efficient in our country. Hence, there is a requirement for a more holistic support.