Professional Documents
Culture Documents
a Logistics Revolution
January 2018
India - On the Cusp of a Logistics Revolution
Contents
1. Introduction 06
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India - On the Cusp of a Logistics Revolution
About ASSOCHAM
ASSOCHAM is the oldest Apex Chamber National Councils serve as the backbone
established in 1920. ASSOCHAM initiated for Chamber’s effective functioning
its endeavour of value creation for Indian and help identify industry concerns
industry since its inception. It spearheads and influence Government (Central
the interest of more than 400 Chambers and State) policies. ASSOCHAM thus
and Trade Associations under its fold, provides networking opportunities for
catering directly and indirectly over its constituent members and also makes
4,00,000 members across the country. special efforts to emphasize its member’s
viewpoints in policy formulations.
ASSOCHAM is well respected for its
balanced and studied approach to ASSOCHAM has emerged as the
matters pertaining to development of fountainhead of knowledge for the Indian
trade and industry and promotion of industry, which is all set to redefine the
government-industry inter-linkages. dynamics of growth and development in
ASSOCHAM plays an important role in the technology-driven cyber age of the
the shaping of India’s Economic, Trade, ‘knowledge-based economy’.
Fiscal and Social policies.
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India - On the Cusp of a Logistics Revolution
Foreword
impact of digitization and the contours
and efficacy of a comprehensive National
Logistics Policy.
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India - On the Cusp of a Logistics Revolution
1. Introduction
The performance of logistics sector in the The effort in the years ahead is to build
economic development of India has never a more robust logistics network in the
been more compelling. A robust logistics country. With better infrastructure
sector can go a long way in boosting planning, increased coordination among
India’s quest for being a manufacturing stakeholders and improved operational
giant given that several initiatives like efficiencies, India aims to unlock the
‘Make in India’ have been launched by potential of the sector needed to fuel
the government. Increasingly, companies economic growth.
across the globe are looking at the world
as both a unified production base and A conference titled ‘India – On the Cusp
a market that a competitive logistics of a Logistics Revolution’ was organised
sector can successfully tap into. The by ASSOCHAM in July 2017 to discuss and
industry has seen rapid growth in the deliberate various aspects pertaining to
last few years due to increased planned the sector. Stakeholders from across the
outlay of the government, improved industry, which included policymakers,
infrastructure facilities and greater modal infrastructure service providers,
access to global markets. However, our terminal infrastructure providers
services have not adequately capitalized and logistics service providers (LSPs),
on the opportunity in the global market attended the conference.
as multiple challenges continue to mire
the sector.
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India - On the Cusp of a Logistics Revolution
The conference aimed to: a) identify key The paper begins with a discussion of
challenges that inhibit growth of the challenges that ail the logistics sector
logistics sector, b) deliberate potential in the country. The following sections
solutions such as integrated end-to- discuss possible ways to address these
end logistics and adoption of digital issues, of which the integration of the
technologies, and c) discuss /examine logistics value chain and adoption
possibility of implementing a cohesive of digital technologies are two chief
national logistics policy. components, sewn together within an
overarching framework of a National
This paper is divided into four main Logistics Policy.
sections comprising session summaries
and insights into the key themes of
the conference.
The need for a National Logistics Transitioning towards an integrated Adopting digital technologies in
Policy in India end-to-end logistics logistics chain
•• Infrastructure creation to move •• Should we first create Demand before •• Are traditional logistics companies
from being unstructured/arbitrary developing modes of Supply? ready for a digitally connected and
to a planned model at Government •• Need for an integrated well-knit integrated supply chain?
policy level. network of logistics enablers-rail, •• Is India ready to implement
•• Need for a National Logistics Policy road, air and waterways. digitalization of the logistics chain
with guidelines to maximize use •• Need to ensure cargo movement in involving the cloud, internet, 3D
of existing infrastructure/assets, the right mode, for optimum use of printing, virtual realities, and most
while creating a blueprint for existing infrastructure. important, skilled workforce.
future growth/demand, both at •• How some companies are using
•• Dangers of a skewed logistics
Govt. and private investment level. technology to improve their supply
framework with catastrophic effect
•• Research reports are available on the environment. chain ecosystem.
with various ministries, but lack
cohesive action due to multiple
Ministries and agencies involved
•• Is there need for a Logistics
Infrastructure Development panel
with investment and regulatory
powers?
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India - On the Cusp of a Logistics Revolution
2. Challenges of the
Indian logistics sector
With globalization, logistics is expected suboptimal modal mix, inefficient
to play an increasing role in driving and ill-designed storage facilities for
the Indian economy. In 2016, India was cargo and containers and inefficient
ranked 35th in The World Bank LPI Index operational and maintenance protocols,
that ranks countries based on their and poor adoption/adaptation of
logistics performance — moving up technology. This leads to high and
from 54th in 2014. While this is reflective inconsistent cargo transit time,
of improvement in the sector, multiple inefficient use of resources and poor
challenges of infrastructural deficiency, fleet management. The selection of the
lack of integration amongst stakeholders, mode of transport, or even storage and
lack of skilled manpower and slow terminal handling protocols are rarely
adoption of technology continue to weigh linked to cargo characteristics (distance
it down. of travel, parcel size, density, etc.). As
a result, there is overuse of high-cost
•• Infrastructure - It is one of the biggest
modes like road at the expense of
hurdles that has cramped growth of
cost-effective and sustainable modes
the logistics sector. It gets reflected
like inland waterways and railways. The
in inadequate and low-quality modal
continuing and prolonged suboptimal
and terminal transport infrastructure,
system, which erroneously appears
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India - On the Cusp of a Logistics Revolution
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India - On the Cusp of a Logistics Revolution
Industry speaks
•• In the absence of a systematic and holistic approach, the use of different modes
of transport has remained skewed and inefficient.
•• There is no single ministry to regulate the logistics sector, which is in dire need of
being accorded the status of an industry. Equally pressing is the need to set up
a National Logistics Commission to boost growth. Lack of coordination between
central and state government poses yet another challenge for the logistics sector
to work holistically. Red tape-ism makes both decision-making and procedures
slow and lengthy.
•• Logistics Performance Index is not an appropriate framework for appraising
domestic logistics segment where we can see how much money we are losing. It is
more useful for assessing international trade.
•• IT systems and EDI (Electronic Data Interchange) facilities are inadequate. As
such, it is not always possible to rely on a standardized system to transfer
information electronically, which makes it difficult to get real-time status of
operations and services.
•• Additional workforce is needed to meet the growing demand. It is also important
to invest in their skill development to ensure quality and efficiency in services.
•• A wide customer base has led to demanding expectation, including personalized
solutions. There is little awareness about using proper modes of transport for
different uses and about environmental concerns.
•• With deficient physical infrastructure, it is difficult to meet the growing demand
despite the increased planned outlay by the government. Private investment is
necessary to boost the sector, as is the presence of pan-India players to provide
end- to-end logistics services and integrated solutions.
•• Under the GST regime, services in relation to transport of goods outside India
where both service provider and recipient are located in India shall be taxable.
Earlier, these services were not subject to levy of service tax.
•• In addition, the e-way bill shall be introduced with effect from April 01, 2018 but
a clarity is awaited regarding the provisions pertaining to local transportation
of goods within a state. The industry hopes that the GST Council will re-look the
earlier draft rules to simplify the entire process of generating e-way bills on the
GST portal.
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India - On the Cusp of a Logistics Revolution
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India - On the Cusp of a Logistics Revolution
3. Integrated end-to-
end logistics
A shipment is a set of horizontal flows aims to transform India’s logistics from
which together constitute the chain a ‘point-to-point’ to a ‘hub- and-spoke’
interspersed with links, and which model, thus evolving centralized strategic
involves multiple stakeholders with networks for shipment distribution rather
varying business models and consequent than relying on direct route operations
expectations from the chain. Integrated that may not be efficient. As part of this
logistics is the seamless flow of cargo initiative, the government plans to set up
across the value chain involving multiple 50 economic corridors, 35 multimodal
stakeholders with varying business logistics parks (MMLP) at 15 locations, ten
models. It helps to accomplish the task intermodal stations, among other things.
most efficiently, thereby reducing the cost While a policy is already being considered
and time of movement. for integrated logistics to be successfully
implemented, several elements need to
Integrated Transport and Logistics be integrated with the horizontal flow
Policy – A step in the right direction across the chain - services, infrastructure
The Government of India is in the and information.
process of preparing an Integrated
Transport and Logistics Policy that
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India - On the Cusp of a Logistics Revolution
Integrated
Infrastructure Platform
Integrated Integrated
end-to-end Services
Logistics Platform
Integrated Digital
Platform
1
In 2016 Avvashya CCI Logistics was established based on a merger between the warehousing and CCFF divisions of CCI logistics and the cargo logistics division
of Allcargo Logistics and Hindustan Cargo.
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India - On the Cusp of a Logistics Revolution
2
India Integrated and Transport and Logistics Summit 2017, PIB India
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India - On the Cusp of a Logistics Revolution
Industry speaks
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India - On the Cusp of a Logistics Revolution
4. Forward movement
towards the fourth industrial
revolution - Adoption of
digital technologies
In the current era of digital Digital transformation has the potential to
transformation, several technological have far-reaching payoffs for a leaner and
disruptions have come together to smarter logistics by ensuring smoother
create powerful tools that are reshaping interface among logistics stakeholders
industries across the globe. As various for seamless delivery. According to the
industries, such as retail with close World Economic Forum (2016)3, digital
links to logistics, are being redefined transformation of the logistics sector
by digital technology, it is inevitable for could translate into value of $1.5 trillion
such disruption to also revolutionize the for players in the logistics sector and an
logistics sector. additional $2.4 trillion worth of societal
benefits by 2025.
3
World Economic Forum (2016), ‘Digital Transformation of Industries: Logistics Industry’
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India - On the Cusp of a Logistics Revolution
Internet of
Things
Cloud Blockchain
Computing Technology
4
DHL and Cisco (2015), ‘Internet of Things in Logistics’
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India - On the Cusp of a Logistics Revolution
Blockchain Technology
•• Providing visibility for in-transit
It can be used to create common
carriers: Additionally, IoT, which
networks among entities unwilling to
includes Global Positioning
share information, without compromising
System (GPS) and Radio-frequency
on the integrity of the data. This
Identification (RFID) systems, is being
technology becomes especially relevant in
used to provide logistics carriers with
the Indian context, given the fragmented
real-time information on key location
nature of the sector and lack of common
stats. This has helped make the logistics
platforms to exchange information. It may
ecosystem more responsive. While
be used for:
on the one hand this provides greater
5
Banker, S (2016), ‘The Hamburg Port Authority's Impressive IoT Project’, Forbes
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India - On the Cusp of a Logistics Revolution
6
Yun, G (2017), ‘'Ghost port': Asia's first fully-automated port begins operations in Qingdao’, CGTN
7
Zhao, W (2017), ‘Europe's Second Largest Port Launches Blockchain Logistics Pilot’, Coindesk
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India - On the Cusp of a Logistics Revolution
8
Predix (2016), ‘Predix Architecture and Services’,
General Electric
9
Cisco (2016), ‘Cisco UCS Integrated Infrastructure
for Big Data and Analytics’, Solution Brief
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India - On the Cusp of a Logistics Revolution
Industry speaks
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India - On the Cusp of a Logistics Revolution
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India - On the Cusp of a Logistics Revolution
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India - On the Cusp of a Logistics Revolution
5. Strategy to
Implementation – A
cohesive national logistics
policy / blueprint
In order to make the Indian logistics with a focus mainly on development of
sector globally competitive an all- integrated transport infrastructure.
encompassing solution is needed A national logistics policy must go
instead of a piecemeal approach. To well beyond.
achieve this, the state can put in place a
comprehensive national logistics policy The national policy must incorporate key
for a larger and holistic improvement drivers for the sector namely integrated
in the sector. An integrated logistics logistics, information technology,
policy has recently been announced, infrastructure, regulation, human
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India - On the Cusp of a Logistics Revolution
resources and skill development and of the logistics sector and should identify
equally important the entire stakeholder programs to address all aspects.
community. The policy, among others
things, should focus on: a) creating A number of countries have developed
a vision for the logistics sector in the similar blueprints and the policy makers
long term, b) formulating action steps can learn from the experiences of
for achieving this vision, c) creating a such countries.
conducive environment for the growth
•• National Logistics Costs of 2015 •• National Logistics Costs of the •• National Logistics Costs of the
GDP declines by 3% from that 2020 GDP declines by 4% from 2025 GDP declines by 5% from
of 2011 that of 2015 that of 2020
•• Indonesian LPI Score is 3.1 •• Indonesian LPI Score 3.3 •• Indonesian LPI Score 3.5
10
Ministry for Economic Affairs, Indonesia (2013), ‘Development of National Logistics System Framework ‘, presentation by Coordinating Minister at Regional
Seminar on Development of Efficient and Effective Logistics Systems
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India - On the Cusp of a Logistics Revolution
4 3
term requirements of the
industry environment
While the State will take the lead in ASSOCHAM, as a premier industry
putting the policy in place, it is the chamber, can support various
responsibility of other stakeholders stakeholders in contributing to the
to contribute to the framing and formulation and implementation of this
implementation of this blueprint. Scoping key initiative.
and governance of the policy would be
crucial for its successful implementation.
Ministry of International Trade and Industry, (2006), ‘Third Industrial Master Plan (IMP3) 2006 – 2020’, Government of Malaysia
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