View: Let's face it, India needs to get its logistics right -

View: Let’s face it, India needs to get its logistics right

When an entrepreneur from Chhattisgarh’s Korba shipped dehydrated mahua flowers to France last month — a first-of-its-kind export item from India —it was bound to elicit much excitement among those connected with the endeavour. GoI issued a press release, a minister of state tweeted, and some officials chatted about how tipsy one could get after drinking mahua liquor.

On August 12, a day after the truck carrying the 9-tonne consignment was flagged off in Chhattisgarh, the Indian embassy in France posted a tweet terming the item as one ‘handcrafted by indigenous people of India’.

That was correct enough. Among central India’s indigenous people — ‘adivasis’ — mahua, or Madhuca longifolia, is inseparable from its socioreligious and economic fabric. And if the mahua’s dehydrated flowers, often used for making liquor and medicine, get exported regularly, it would surely benefit a large section of adivasis, who collect the flowers from forests. Or, that was the plan.

The journey was not without the usual tribulations often faced by exporters when shipping new items. Indian customs officials in Mumbai’s Nhava Sheva port detained the cargo for a fortnight, raising a volley of questions, before letting it pass. Ultimately, the consignment was on its way to the port of Le Havre.

Sure, some queries or suspicions at Nhava Sheva could well have been justified. Custom officials will occasionally ruffle an exporter’s feathers. That’s not the critical point. The question here is bigger, something that exposes lack of coordination among government agencies, and which puts the spotlight on India’s logistics malaise.

If India hopes to be competitive in the global market, it has to get its logistics right. A special secretary-headed division tucked away at a corner in Udyog Bhavan is clearly not good enough. Logistics needs to be a full-fledged ministry headed by a political heavyweight, who should be able to pick up the phone and break ministerial silos.

Logistics in India involves some 20 GoI ministries and agencies, including the ministries of finance, commerce, road transport and aviation, 40 other partnering government agencies (PGAs), 37 export promotion councils, 500 certifications, 200 shipping agencies, 36 logistics services, 129 dry ports, just to name a few. For export-import alone, there are 81 authorities and 500 certificates.

For the past several years, trade experts and stakeholders have drawn attention to the ground reality that logistics costs in India — at 13-14% of GDP, against 8-9% in most developed nations — are far too high, impinging on the nation’s export efficiency with an impact on domestic prices as well. The question of logistics efficacy that could lead to a robust export number this fiscal has become all the more relevant as the economy has been striving for a rally after recording adisastrous –7.3% GDP in Covid-hit 2020-21. In this year’s recovery, exports could surface as a key driver.

India’s healthy merchandise export for April-August this year — $164 billion against $133 billion of the corresponding period of pre-Covid 2019 — has been aray of hope for a faster recovery. In the same period of 2020, it slipped below the $100-billion mark.

In this backdrop, efficient logistics could play a stellar role. The sector primarily involves three components: transportation modes, storage capacity, services and regulatory processes. Overhauling the existing transport infrastructure will be a Herculean task. Apartial rollout of Indian Railways’ `95,238-crore dedicated freight corridor has been a modest step. Also, there has been some headway in the use of technology — geotagging of warehouses, introduction of e-way bills under GST, FASTag for highway toll booths, etc — all contributing to some reduction of a cargo’s overall turnaround time.

GoI needs to seriously focus on reducing regulatory hurdles. And that can be possible if it succeeds in breaking the silos in ministries and realigning its own agencies into one big logistics platform. Four years ago, GoI amended the Second Schedule of the Government of India (Allocation of Business) Rules, 1961, to facilitate the creation of a separate logistics division within the department of commerce, mandating it the task of ‘integrated development of logistics sector’.

But it decided to be circumspect, skipping the task of creating a separate department under a secretary-ranked officer, never mind a full-scale ministry. It was concerned that such an entity could step on other ministerial toes. It’s time the government bites the bullet and creates a super ministry that can disrupt existing well-laid out interministerial protocols, which will ultimately streamline the logistics sector like never before.

The cost of logistics has to be brought down to single-digit percentage of the GDP, if India intends to continue a robust growth on a sustained basis.

Views expressed are author’s own

Source link

Subscribe to Infrabuddy Newsletter