The Logistics Headlines, New Delhi, 22nd March : With Goods and Services Tax (GST) to be executed in July 2017, companies will get a chance to reshape their supply chains given integration of the domestic market. However, the production structure can be facilitated only if India accepts a new logistics network for allowing components, inputs, and finished goods’ to-and-fro through the country, without disruptions. The modern logistics network approach will also account for the success of the Make in India programme.
It is on the shoulders of Nitin Gadkari (the Union road transport, and highways, shipping and port minister), to bring the integrated and modern logistics network to success.
Virtues of Networked Logistics Systems
- Well networked logistics systems will fast-track technology
- Improve predictability, containerization with live tracking chips will prosper
- Provide granular data (essential for policymaking for business and its projections), and greater security will be enabled.
Deficiencies in Indian Transport Sector
Since 1990s, the demand for transport did grow at 10% annually, but it lacked the necessary push for manufacturing and farmer earnings, making the benefits for urban economies a bit insignificant. Because of complex administrative procedures and regulations, model mix and links have suffered.
According to 2008 statistics, the mix of total freight stood at 0.01% by airways, 0.2% by inland waterways, 6% by coastal shipping, 7.5% by pipelines, 36% by railways, and 50% of by roads. Though these ratios are better now, but there has been no substantial increase.
Programs Which Will Help Speed up Multi-modal Hubs and Parks
As per the last budget speech by Arun Jaitley (the Union finance minister), our nation’s economy shall be more competitive only with effective transport sector and multi-modal logistics. This is why; the ministry has decided to allot specific programmes for enhancing multi-modal transport and logistics parks.
In the last week, Mr. Gadkari spoke about the respective programme, stressing on the need of hub-and-spoke mode, a shift from point-to-point logistics mode.
With 35 multi-modal logistics parks costing about Rs. 50, 000 crore, and plans to develop 50 economic corridors driving investment from private sector and states, it is much more crucial to adhere to the integrated approach for actualizing progress in highways, railways, airports, and inland waterways.
New Opportunities to Team in Larger Logistics Markets
Being an ambitious aim, resources have to be geared towards reducing transportation cost time and cost of production by restricting the requirement for large inventories. Thus, less capital will come to be used for insurance, warehouses etc.
Right now, the inter-state trade flows for the country is estimated at 54% of the GDP, and bringing friction down by improving logistics can further boost the figure.
Such logistics network may also lessen divergence in regional growth. It will highlight growth in logistics enterprises, which is great for creating new markets for goods, and pacing the demand in logistics sector with better infrastructures.
Multi-modal Hubs with Logistics Network to Eradicate Transportation Woes
Even though transport by inland waterways and rail are cost and time efficient than road transport, the freight flow has been lower in the last sector. With Gadkari’s integrated policy, the Modi government’s plan for road and rail dedicated freight corridors and solution for lack of last-mile connectivity at Indian ports, will soon witness the light of the day.
In 2014, a report to Planning Commission then was written by the national transport development policy committee that a single unified ministry, which has a clear mandate for delivering multi-modal transport systems shall can contribute to the nation’s larger development goals, making the logic of integrated multi-modal policy a compulsory standard operating process, seeing a growing importance even today.