OFF-TRACK
India’s logistic halts more than it actually travels
India’s rank in Doing Business Report, 2011 is a dismal 134 – a pathetic rank when compared to its regional counterparts (Malaysia 21, China 79, Pakistan 83 and Sri Lanka 102). But what is worse is the manner in which the ranks of its important parameters are falling year after year. In Doing Business Report 2011 scorecard, India slipped down notches on five out of nine parameters – which are substantial and form the bedrock of a sustainable business environment. This fall can be attributed to various factors ranging from red-tapism to stringent licensing process. However, amongst these damaging factors, the most ignored is the state of logistics in the country.
When it comes to logistics, Indian railways form the backbone of Indian transport; most of the cargo is transported through railways. Not only it is cheaper but also it connects the remotest of locations. Unfortunately, one of the biggest challenges that Indian Railways is facing today is constant delays. What is even more surprising is that these delays are neither addressed nor are given any serious heed. On an average, trains coming to New Delhi – India's capital – are delayed by 83 minutes. Merely 40 per cent of all cargos are transported by trains which rolls at a snail’s pace of 40 miles/hour compared to China's 100 miles/hour.
Indian ports also spell economic disaster. Till date, no Indian port is capable enough of handling large container vessels. Thus, most of international cargos are off -loaded at Colombo or nearby ports and then transported to India in bits and pieces. This very incapability robs Rs.10 billion from traders. Even the custom clearance at ports increases the transport time by an average of 84 hours.
Not only an Indian businessman but also foreign investors are well versed with the sorry state of Indian logistical infrastructure. So much so that, today a manufacturer accounts-in extra couple of days in his transaction as a lead time while dispatching orders. The condition of roads in India is so appalling that a transport vehicle takes 25 per cent more time to reach its destination than what it would have taken otherwise. Economic loss due to poor roads is estimated to be $6 billion per year. Add to this, the expected cost due to poor road infrastructure and frequent check-ups would go up to Rs.600 billion annually by 2017. Traffic jams in capital alone steals away Rs.11.5 crore per day and delaying the transport time by over 90 minutes every day, as per a survey by Centre for Transforming India (CTI).
As per ASSOCHAM, loss due to poor logistics infrastructure is pegged at $140 billion in the coming decade if no major transport infrastructure development plan is put in place. In fact, there are a few factors which would not only increase the revenue but also generate economies for the Indian business eco-system as a whole. And logistics is definitely one of them. The concerned authorities need to understand that cargo handling and transport is a vital part of a supply chain that further impacts the bottom line and eventually the demand-supply dynamics. We, in the past, have been audience to how delays led to increase in price and also hoarding to a large extent. A well maintained and state-of-art logistic infrastructure would not only fulfill market demand at right time (and at right price) but also trim down the cost of distribution at large. In an era, wherein, technology and innovation are reducing time and distance, it is the Indian roads, ports and railways which are moving progressively in diametrically opposite direction.
India’s rank in Doing Business Report, 2011 is a dismal 134 – a pathetic rank when compared to its regional counterparts (Malaysia 21, China 79, Pakistan 83 and Sri Lanka 102). But what is worse is the manner in which the ranks of its important parameters are falling year after year. In Doing Business Report 2011 scorecard, India slipped down notches on five out of nine parameters – which are substantial and form the bedrock of a sustainable business environment. This fall can be attributed to various factors ranging from red-tapism to stringent licensing process. However, amongst these damaging factors, the most ignored is the state of logistics in the country.
When it comes to logistics, Indian railways form the backbone of Indian transport; most of the cargo is transported through railways. Not only it is cheaper but also it connects the remotest of locations. Unfortunately, one of the biggest challenges that Indian Railways is facing today is constant delays. What is even more surprising is that these delays are neither addressed nor are given any serious heed. On an average, trains coming to New Delhi – India's capital – are delayed by 83 minutes. Merely 40 per cent of all cargos are transported by trains which rolls at a snail’s pace of 40 miles/hour compared to China's 100 miles/hour.
Indian ports also spell economic disaster. Till date, no Indian port is capable enough of handling large container vessels. Thus, most of international cargos are off -loaded at Colombo or nearby ports and then transported to India in bits and pieces. This very incapability robs Rs.10 billion from traders. Even the custom clearance at ports increases the transport time by an average of 84 hours.
Not only an Indian businessman but also foreign investors are well versed with the sorry state of Indian logistical infrastructure. So much so that, today a manufacturer accounts-in extra couple of days in his transaction as a lead time while dispatching orders. The condition of roads in India is so appalling that a transport vehicle takes 25 per cent more time to reach its destination than what it would have taken otherwise. Economic loss due to poor roads is estimated to be $6 billion per year. Add to this, the expected cost due to poor road infrastructure and frequent check-ups would go up to Rs.600 billion annually by 2017. Traffic jams in capital alone steals away Rs.11.5 crore per day and delaying the transport time by over 90 minutes every day, as per a survey by Centre for Transforming India (CTI).
As per ASSOCHAM, loss due to poor logistics infrastructure is pegged at $140 billion in the coming decade if no major transport infrastructure development plan is put in place. In fact, there are a few factors which would not only increase the revenue but also generate economies for the Indian business eco-system as a whole. And logistics is definitely one of them. The concerned authorities need to understand that cargo handling and transport is a vital part of a supply chain that further impacts the bottom line and eventually the demand-supply dynamics. We, in the past, have been audience to how delays led to increase in price and also hoarding to a large extent. A well maintained and state-of-art logistic infrastructure would not only fulfill market demand at right time (and at right price) but also trim down the cost of distribution at large. In an era, wherein, technology and innovation are reducing time and distance, it is the Indian roads, ports and railways which are moving progressively in diametrically opposite direction.
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