India has now replaced China as the biggest emerging market with the most potential to grow, according to a survey conducted as part of the Agility Emerging Markets Logistics Index 2016. Infrastructure development is a critical enabler to economic growth and although the urgency to develop India’s logistics infrastructure has been highlighted in the last few years, the task at hand is huge.
To combat and work towards a greater solution, India’s government have actively begun to use pro-logistics policies and tripled infrastructure spend in the last decade which will see forwarders take a bigger interest in India as the opportunities arise.
Last year in its annual budget, India announced policies with a greater focus on agriculture, rather than business. Much was said about the enthusiastic use of the word ‘warehouse’ by the Finance Minister during his budget speech, and how it shows just how focused and eager India are in building their logistics industry.
The budget saw many positive developments put into motion including the building of the first rail hub in the South to help move vehicles from factories to consumers – a move welcomed by car makers. Investment into roads and expressways to help develop India’s industrial corridor was also announced, while some 160 regional or unused airports will receive funding also.
The planned GST system, due to start in the coming year, replacing around 15 state and federal taxes and tariffs for a single tax at the point of sale is also being welcomed. With as much as 65% of India’s freight moving by road, GST reform is critical for India and the businesses that operate there. GST, combined with the dismantling of inter-state check posts, will be the most crucial reform since the economic liberalisation in 1991. This reform will significantly improve the domestic and global competitiveness of Indian manufacturing firms, according to the Indian Institute of Materials Management.
The Make in India initiative, now in its second year, is also seeking to encourage multi-national and domestic companies in the logistics industry to keep trade and manufacturing of goods in India.
Speaking at Air Cargo India last February, Renu Singh Parmar, Senior Adviser for India’s Ministry of Civil Aviation, said that some 20,000 jobs would be created in air cargo alone by 2035. She also said that dwell times would be cut to 48 hours within a year, and the government would endeavour to reduce logistics costs – currently about 13-14 per cent of GDP – to a figure closer to that of developed countries, about 7-8 per cent.
India stands to gain economically from implementing an effective and efficient balanced modal logistics infrastructure system. Environmental gains like reduction in emissions and reduced energy consumption are also said to be likely impacts. The road ahead is difficult and requires both strong leadership to align centre and states and rigorous project management, but India is on the move and is an exciting emerging market for all logistics leaders to be looking toward.
Kevin Brady, MD, Woodland Group Ireland