A slow push to the Global Logistics sector in 2013-14, now aims at the logistics industry growth to reach over $2 bn by 2019. Rise of e-commerce logistics and increased domestic consumption will lead the way for the industry in the coming years. With a promise of growth and improvements, the service-oriented logistics industry is ready to expand beyond the horizons in the latter half of this decade.
The recent Indian logistics sector comprises of inbound and outbound segments of the manufacturing and service supply chains. Of late, the logistics infrastructure has gained a lot of attention both from business industry as well as policy makers. The role of managing this infrastructure, to effectively compete has been slightly under-emphasized.
Inadequate logistics infrastructure has an effect of creating bottlenecks in the growth of an economy. The logistics management regimen has the capability of overcoming the disadvantages of the infrastructure in the short run while providing cutting edge competitiveness in the long term. There exist several challenges and opportunities for logistic sector in the Indian economy.
En-route solution esplanade
Infrastructure is the backbone of every country’s growth and prosperity and for the logistics industry to flourish, special emphasis has to be on building world-class road networks, integrated rail corridors, modern cargo facilities at airports and creation of logistics parks, which need to be given a status equivalent to Special Economic Zones.
It is necessary to realize that the benefits which can best be practiced in logistics industry can be brought about by the companies by establishing training intuitions so that there is improvement in the overall service quality of the sector. Good storage and Warehousing facilities are important for the growth of the logistics industry. With the increase in the transportation of perishable products, the logistics agencies need to give a lot of importance to enhancing the Warehousing facilities.
Dubai International Financial Centre (DIFC), the leading financial hub in the $7.4 trillion Middle East, Africa and South Asia (MEASA) region has signed a Memorandum of Understanding with Gujarat International Finance Tec-City (GIFT)on Feb 28, 2017 in an effort to encourage further cooperation and collaboration between the financial centres.
Gujarat International Financial Tec-City Special Economic Zone (GIFT SEZ) is a wholly owned subsidiary of Gujarat International Financial Tec-City Company Limited (GIFTCL) and is responsible for the development of the Special Economic Zone with regards to International Financial Services Centre. It is India’s first International Financial Services Centre (IFSC) established under the Special Economic Zone Act, 2005 (“SEZ Act 2005”). Following the SEZ Act 2005 and the Special Economic Zone Rules of 2006, Multi Services business oriented entities including Banking, Insurance & Capital markets institutions are allowed to set up operations in the GIFT SEZ.
On this occasion, Arif Amiri said: “We are delighted to sign this Memorandum of Understanding with GIFT, especially at a time when UAE ties with India are growing ever closer. India represents the UAE’s third largest trading partner as well as one of the world’s fastest growing economies, and natural synergies between the two centres exist which will certainly benefit our respective clients.
· India’s Asian integration strategy
The good news is that the current government is approaching infrastructure upgrading with renewed focus.
One promising strategy is the use of ‘coastal employment zones’ in the style of the special economic zones in Shenzhen and Guangdong, China. By introducing flexible land and labour rules in limited areas, rather than to the country as a whole, these could provide a politically viable solution for overcoming the highly restrictive impact of these laws on business. Over the medium term, the zones are aimed at attracting large manufacturing firms that exit China as wages there rise. But, the strategy wouldn’t be easy to implement. Coastal land is hard to acquire, and unlike China, India is a federalist democracy.
Double-digit growth is only possible for India with a strong export sector. The pace of global trade growth is slowing, multilateral trade negotiations through the World Trade Organization are at a dead end and the Trans-Pacific Partnership is a thing of the past. If India moves too slowly on trade, it will miss the bus; if it moves too fast, it could suffer a domestic backlash.
· Development of ports and transportation for trade facilitation
Trade facilitation refers to broader range of measures that aims to streamlining the movement of goods, reduction of red tape, procedural barriers including tariff structures and other broad trade supporting services. Trade facilitation impacts on the percentage growth of Gross Domestic Product (GDP) and international trade.
It has been envisaged in government plan to establish a power hub at Maheshkhali, Cox’s Bazar, for the production of about 10,000MW power from coal based super critical power plant through construction of eight 2X660MW power plants. Each plant will require imported coal of 6.5 Million Tons per annum (MTPA). When all the plants will be operational, total coal requirement would be 28.00 MTPA. A dedicated coal terminal for regular supply of coal to the power plants should be constructed on a priority basis. Similarly, in addition to the construction Payra Port for handling general and containerized cargoes, a separate coal terminal has to be built for regular supply of coal to the envisaged three 2X660 MW coal based power plants at Payra.
Moreover, government has also envisaged establishing 100 Special Economic Zone (SEZs) and more Special Export Processing Zone (SEPZ) for individual countries like the existing Korean Export Processing Zone (KEPZ). When these SEZs and SPEPZs will be established, cargo handling capacities of Chittagong, Mongla and Payra port, along with other public and private inland ports, will have to be enhanced to accommodate the increased volume of cargoes.
· The global tango at Aero India 2017 show
The who’s who of the global aerospace industry congregated in Bengaluru from February 14-18 to take part in Asia’s largest airshow Aero India-2017. Over 550 defence and aerospace firms, including 279 foreign companies took part in the 11th edition of the biennial event being held at the Yelahanka air force base.
A global conference of CEOs on aerospace and defence manufacturing opportunities in Andhra Pradesh was one of the highlights on the opening day of the airshow. Several Indian states have been wooing foreign vendors to set up the manufacturing facilities under the ‘Make in India’ initiative.
Andhra Pradesh, Gujarat, Karnataka and Kerala are also setting up exclusive special economic zones pavilions for attracting investments.
(Curated by Sana Husain, Corporate Analyst, Jayem Logistics)