logistics industry’s wishlist

18
CARGO CONNECT - JUNE 2014 22 JUNE 2014 - CARGO CONNECT 23 Logistics industry’s wishlist to the new government The degree of organisation and control over freight movements is implied by logistics which is at the core of supply chain management and is considered as an area of priority due to the significant rise in the volume of freight traffic moved. But despite a significant contribution being made by the logistics industry to the Indian economy, the logistics sector in India remains mired in several complexities which has been holding it back. Though the growth in the Indian economy has led to a high rise in the freight traffic, a lot needs to be done on the part of the government to remove those hiccups which prove to be a barrier in the growth of this industry. Abeer rAy in conjunction with the stalwarts of the logistics industry examines the demands put forth by the industry to the new government in a bid to make the working of this industry smooth and manageable. T he logistics industry has an important role to play in the country’s trade and economy because of its supporting role. Due to the logistics sector being one of the key determinants of the future growth of the Indian economy, this industry is being looked upon as an area of priority now. The significant rise in the volume of traffic moved and its future growth potential has made this sector as one of the most attractive sectors in the country. But despite the logistics sector serving as the backbone for all the major key sectors like retail, automobiles, pharmaceuticals, etc. contributing to the extent of US $ 14 billion and poised to grow annually at the rate of 15-20 per cent, the logistics industry continues to suffer due to comparatively lesser importance being attached to it. The industry that serves as the cornerstone to the prosperity of a country continues to be neglected and though the industry is poised to develop and extend itself on strong economic fundamentals, there are bottlenecks that hamper its growth. Also despite the cost of labour, which is one of the most significant contributors to the costs incurred in logistics, being significantly cheap in India, the logistics industry incurs a high cost because of the various challenges faced by it. Some of the challenges faced by the Indian logistics industry are listed below: Poor state of infrastructure With assured quality and quantity along with timeliness being the hallmark of this industry, the need for proper infrastructure is an imperative. Though the country’s infrastructure, being the backbone of the economy, has undergone massive changes since independence owing to the rapid growth rate of the Indian economy and fast paced urbanisation, a lot still needs to be done to sustain the country’s expansion and long-term prosperity. The transportation sector is overburdened due to important railway networks being oversaturated, high level of fragmentation of the trucking industry, inadequate road network coverage, poor road quality, multiple check points for vehicle movements etc. Multiple toll policy Efficiency gets reduced due to multiple toll points on highways that adversely affect the turnaround time of trucks. The trucks are stopped at state borders for payment of toll taxes, RTO inspections, Octroi, etc. The lack of uniformities in toll charges owing to different stretches on BOT basis creates irregularities in the cost structure. Poor warehousing infrastructure Less attention is paid to warehousing of non-agricultural commodities. Though the warehousing costs range between 20 to 25 per cent of the total logistics cost, the state of warehousing is very disapproving. Apart from the poor quality, the number of warehouses in the country is limited. Majority of the operators of the existing warehouses are small to mid-sized entrepreneurs and the large warehouses are run by government agencies. Stalwarts of the logistics industry believe that the public and private players should join hands together for developing warehousing facilities. But due to lack of land reforms by the government till date, there has been absolutely no provision for setting apart land for logistics facilities. Non-implementation of Goods and Service Tax (GST) The logistics industry is looking forward to the much-awaited Goods and Service Tax (GST) due to the unwarranted tax being levied on them by Value Added Tax authorities. Multiple documents required There is a common complaint among the professionals in the logistics industry against the multiplicity of forms to be filled at check posts or offices. Despite the boom in use of Information Technology, documentation in this sector mostly is done manually. High rail freight tariffs The Indian Railways follows a policy of subsidizing passenger tariff by freight tariff. This has affected the railway freight adversely with the railway freight rate being constantly increasing over the years in a bid to stagnate the passenger tariff rate. Poor quality of rail terminal Most of the rail terminals that are used for loading or unloading of goods are outdated and old-fashioned. Also, the problems regarding issues of access and evacuation of traffic are others which the rail transport system suffers from. Coastal shipping has not yet taken off The inadequate port and land side infrastructure disallows large scale use of the ports for freight movement, thus hampering coastal shipping in India. COVER STORY COVER STORY

Upload: abeer-ray

Post on 16-Feb-2017

246 views

Category:

Documents


1 download

TRANSCRIPT

Page 1: Logistics industry’s wishlist

CargoConneCt - JUNE 201422 JUNE 2014 - CargoConneCt 23

Logistics industry’s wishlist to the new governmentThe degree of organisation and control over freight movements is implied by logistics which is at the core of supply chain management and is considered as an area of priority due to the significant rise in the volume of freight traffic moved. But despite a significant contribution being made by the logistics industry to the Indian economy, the logistics sector in India remains mired in several complexities which has been holding it back. Though the growth in the Indian economy has led to a high rise in the freight traffic, a lot needs to be done on the part of the government to remove those hiccups which prove to be a barrier in the growth of this industry. Abeer rAy in conjunction with the stalwarts of the logistics industry examines the demands put forth by the industry to the new government in a bid to make the working of this industry smooth and manageable.

Th e l o g i s t i c s i n d u s t r y h a s a n i mp or t a nt r ole to pl ay i n t he country’s trade and economy because

of its supporting role. Due to the logistics sector being one of the key determinants of the future growth of the Indian economy, this industry is being looked upon as an area of priority now. The significant rise in the volume of traffic moved and its future growth potential has made this sector as one of the most attractive sectors in the country.

But despite the logistics sector serving as the backbone for all the major key sectors like retail, automobiles, pharmaceuticals, etc. contributing to the extent of US $ 14 billion and poised to grow annually at the rate of 15-20 per cent, the logistics industry

continues to suffer due to comparatively lesser importance being attached to it. The industry that serves as the cornerstone to the prosperity of a country continues to be neglected and though the industry is poised to develop and extend itself on strong economic fundamentals, there are bottlenecks that hamper its growth.

Also despite the cost of labour, which is one of the most significant contributors to the costs incurred in logistics, being significantly cheap in India, the logistics industry incurs a high cost because of the various challenges faced by it. Some of the challenges faced by the Indian logistics industry are listed below:

Poor state of infrastructureWith assured quality and quantity along

with timeliness being the hallmark of this industry, the need for proper infrastructure is an imperative. Though the country’s infrastructure, being the backbone of the economy, has undergone massive changes since independence owing to the rapid growth rate of the Indian economy and fast paced urbanisation, a lot still needs to be done to sustain the country’s expansion and long-term prosperity.

The transportation sector is overburdened due to important railway networks being oversaturated, high level of fragmentation of the trucking industry, inadequate road network coverage, poor road quality, multiple check points for vehicle movements etc.

Multiple toll policyEfficiency gets reduced due to multiple

toll points on highways that adversely affect the turnaround time of trucks. The trucks are stopped at state borders for payment of toll taxes, RTO inspections, Octroi, etc. The lack of uniformities in toll charges owing to different stretches on BOT basis creates irregularities in the cost structure.

Poor warehousing infrastructureLess attention is paid to warehousing

of non-agricultural commodities. Though the warehousing costs range between 20 to 25 per cent of the total logistics cost, the state of warehousing is very disapproving. Apart from the poor quality, the number of warehouses in the country is limited. Majority of the operators of the existing

wa r e hou s e s a r e s m a l l t o m id- s i z e d entrepreneurs and the large warehouses are run by government agencies. Stalwarts of the logistics industry believe that the publ ic and private players should join hands together for developing warehousing facilities. But due to lack of land reforms by the government till date, there has been absolutely no provision for setting apart land for logistics facilities.

Non-implementation of Goods and Service Tax (GST)

The logistics industry is looking forward to the much-awaited Goods and Service Tax (GST) due to the unwarranted tax being levied on them by Value Added Tax authorities.

Multiple documents required There is a common complaint among the

professionals in the logistics industry against the multiplicity of forms to be filled at check posts or offices. Despite the boom in use of Information Technology, documentation in this sector mostly is done manually.

High rail freight tariffsThe Indian Railways follows a policy

of subsidizing passenger tariff by freight tariff. This has affected the railway freight adversely with the railway freight rate being constantly increasing over the years in a bid to stagnate the passenger tariff rate.

Poor quality of rail terminalMost of the rail terminals that are used

for loading or unloading of goods are outdated and old-fashioned. A lso, the problems regarding issues of access and evacuation of traffic are others which the rail transport system suffers from.

Coastal shipping has not yet taken offThe inadequate port and land side

infrastructure disallows large scale use of the ports for freight movement, thus hampering coastal shipping in India.

COVER STORY COVER STORY

Page 2: Logistics industry’s wishlist

CargoConneCt - JUNE 201424 JUNE 2014 - CargoConneCt 25

Poor state of ICD/CFSThe ICD/CFS infrastructure available for

trade in exports and imports is inadequate. Due to several hurdles left to be cleared in the consolidation of land, it is difficult to acquire land to set up ICD/CFS at an appropriate place. The existing facilities, themselves, are enmeshed in several problems as

• Day movements of trucks are restricted due to most of the older facilities located within city boundaries

• Evacuation of cargo difficult due to the deteriorating quality of the roads that lead to facilities

• Inadequate parking, lack of available land for expansion and paving in most facilities

Multimodal logistics parks yet to take off

Due to the transpiring and constant need for integrated logistics, provision of

transportation hub, value addition etc. large logistics parks were sought to be developed. But, the integration and amalgamation of large land parcels has posed to be a major issue hampering their development. The lack of recognition of the concept of Logistics Park by state government is another issue that needs to be dealt with.

Complex tax structureThe complicated tax regime has posed

several challenges before the logistics industry. The payment of multiple and central taxes has resulted in considerable loss of time in transit for road freight due to payment of such taxes and fragmentation of warehousing space, hence, providing a disincentive to create large integrated warehousing spaces.

Low rate of technology adoptionThough the industry has adopted the

use of RFID, vehicle tracking technologies,

warehouse management systems etc., there is low level of technology adoption which is a major disadvantage to the Indian logistics industry. Automation in processes is at its early stages.

Skill-related challenges faced by the industry

A variety of skills as technology skills, industry understanding and multi-operation skills are required for the working of this industry which needs to be upgraded urgently.

Talking about the wishes that the logistics industry has from the new government, the veterans of the logistics industry put forth their views on what the industry is looking forward from the new government.

COVER STORY

Due to the various bottlenecks that have been hampering the growth of the Indian logistics industry making it inefficient, thereby, not only impacting the competitiveness of the Indian economy but also affecting the financial well-being of every individual citizen, the logistics industry has come with up with a set of demands from the new government that they believe will not only lead to reduction in logistics costs but also help in increasing the trade flows in a country leading to increase in the inherent competitiveness of the economy. The demands, if met, will lead to significant increase in the employment opportunities in the economy.

Vinod Nautiyal, CMD, EXPAN-unit of FNPL

Moving forward, following solutions will be required to be taken up by the new government to boost this major industry, contributing to India’s economic growth:

• Coordination in infrastructure planning: Port capacity, road and rai l connectivity growth.

• I mpr ove m e nt i n t a x r e g i m e : Introduction and implementation of GST, tax regimes need to be simplified and reduced to a ‘one window/ one time levy across regions so that administrative processes do not hinder physical free flow of movement and to bring cost reduction, in terms of multiple tax levying. It’s believed that there will be a saving on fuel cost of USD 2.5 billion annually that transport incurs at check points currently.

• Improving dialogue with logistics

i ndustr y : Blue pr i nts a nd pol icy regulations today are a largely one sided affair, making policies prone to avoidable trial and error events. This needs to change.

The future of the Indian logistics industry ultimately lies in the value proposition of the customer. Value solutions can be engineered only if the complex supply chain meshes together seamlessly. The future course of action, policies of the government will determine the success ratio of growth in this field. It is going to turn around on the back of robust GDP growth, globalisation and FDI in logistics.

Growth in the logistics sector would imply improved service delivery and customer satisfaction leading to growth of export of Indian goods and potential for creation of job opportunities.

Vinod Nautiyal, CMD, EXPAN-unit of FNPL

Page 3: Logistics industry’s wishlist

CargoConneCt - JUNE 201426 JUNE 2014 - CargoConneCt 27

COVER STORY

Gautam Nath, Business Head, People Transport Solutions, Mahindra Logistics

With Narendra Modi set to become India’s 15th Prime Minister, I am quite hopeful that the new government will bring in developmental reforms and work towards the economic stability and prosperity of India in the years to come.

I am expecting the new government to take up infrastructure development on priority, not just in terms of reducing the infrastructural bottlenecks in metros and tier I cities, but also in terms of developing a transportation network across all tier II and III towns. Apart from development of infrastructure, it is also important to allocate funds for its maintenance. Another imperative is that communications infrastructure like internet connectivity be made more accessible, reliable and affordable. Development of logistics parks, hubs and free trade zones will have to be looked into as well.

India’s post-harvest fruit and vegetable losses are over Rs 2 lakh crore annually,

owing to inadequate cold storage facilities and lack of proper food processing units, as per a study by Assocham. Hence, improving storage infrastructure is paramount to reduce post-harvest losses.

Balancing the current modal skew should be another focus area. The bulk of transportation today, again as much as 60 per cent, is by road. This is the root cause for much of the inefficiencies most logistics systems face in India today. In most cases rail can be an excellent long haul option, but the lack of infrastructure - from sidings, to customised rolling stock, to yards and break bulk facilities - prevents rail from being a viable long haul option. The next is the level of development of, and the handling efficiency at, ports. Our country has admirable geographic advantage, a vast coast line, excellent deep water anchorage and harbours, well placed at the intersection of major global trade routes. Yet, we lag well behind others when it comes to our dock facilities and our capacity to effectively handle large container and bulk volumes. Encouraging more public-private partnerships and investments will certainly prove to be beneficial.

Implementation of a single GST across India is one of the most awaited reforms currently. We expect the government to speed up this process. GST will offer huge opportunities to 3PLs, as OEMs will no longer build warehouses and plants based on the state tax laws and will be more open to undertaking inter-state transport activities. Also, it will boost outsourcing of warehousing activities, encourage investments in latest warehousing processes and technologies and offer economies of scale.

The government should have a committee for encouraging information technology

integration in logistics and supply chain. Lack of visibility and transparency of operations is one of the biggest hurdles this industry is facing. Automation of logistics processes can bring in standardisation, predictability & accountability in the industry, thereby making it more professional and encouraging multinationals and foreign players to opt for domestic 3PLs. Also, facilitating integration of all logistical activities instead of a piecemeal approach is essential in making supply chain as a profit centre instead of a cost centre.

I would like the new government to simplify regulatory policies that raise costs for both domestic and foreign firms, thereby, portraying India as an attractive destination for international trade giving impetus to logistics and supply chain. One glaring area which needs to be paid attention is ‘Border Management’, not just customs clearance but also other regulatory requirements and processes that pertain to goods entering or leaving a country.

Some other improvements that I would l ike to witness are emergency response systems on highways for accidents with trauma infrastructure at key locations, stricter penalties for overloading of vehicles and better enforcement of traffic laws. Investment in driver training institutions and per iod ic test ing and reva l idation of driving skills is the need of the hour and should be taken up seriously. Not to forget, the acute shortage of supply chain professionals that exist in our country has to be dealt with facilitation of adequate training and education.

These developments are possible only if there is integration of flow of information among various government bodies into one central framework.

Page 4: Logistics industry’s wishlist

CargoConneCt - JUNE 201428 JUNE 2014 - CargoConneCt 29

Samik Chakraborty, Zonal Business Head – East, Drive India Enterprise Solutions Limited

My expectation from the new government is that they will speed up the implementation of GST and streamline the indirect tax structure. A vigorous implementation of GST would help in dividing the taxation burden equitably between manufacturing and services industries. Investment in developing transportation network and infrastructure will strengthen the organised and integrated logistics industry, which is crucial for the economic growth of the country. I also hope that the government takes up new projects to develop and provide modern facilities and equipment to the non-major ports in order to reduce traffic congestion and increase overall turnaround efficiency.

Development of ded icated ra i lway

freight corridors and establishing airports for exclusive cargo handling would make the Indian supply chain more competitive. Creation of proper framework for PPP p r o j e c t s w o u l d e n c o u r a g e f u r t h e r investment. In addition to this, improving the cold chain storage and transportation facilities for perishable goods, f lexibility in legislation and taxation for creating warehousi ng hubs, ICD/CFS, yard for multimodal transportation etc. are crucial for the supply chain set up. Finally, an effective synchronisation between various government agencies who are involved in dealing with sourcing, manufactur ing, storage and distribution processes of different industries is a must.

COVER STORY

Manvendra Singh, Regional Manager - Central & West India, Air France-KLM and Martinair Cargo

The current growth and future potential of the Indian economy make the Indian logistics sector one of the most attractive in the world. With the new Government’s focus on economic growth, the logistics sector needs to get the required impetus to aid this growth.

At present, the air freight sector in India suffers from several issues which needs to be addressed, for example:

• Infrastructure at cargo terminals for access, storage and cold chain facilities

• Long ‘Desk t i me’ for necessa r y per m issions a nd per m its for a i rcra f t movements

• Complicated tax/drawback structure• Consistent government fiscal policies

for international trade growth• Develop more SEZs near international

airports

• Indian regulatory bodies need to be more trade friendly.

The future of the Indian logistics industry lies in value propositions for the customer which can be engineered only if the complex strands of supply chain mesh together seam lessly. It would a lso prove benef icia l i f the air freight trade bodies are included i n i n f rast r uct ure pla n n i ng by the various agencies of the government. I n t r o d u c i n g l o g i s t i c s g r a d u a t e programmes in recognised institutions would help in building a professional manpower which is essential for the industry. The future is bright for the logistics industry in India and we hope we are near the ‘Tipping Point’ with the new government’s focus on overall economic development.

Page 5: Logistics industry’s wishlist

CargoConneCt - JUNE 201430 JUNE 2014 - CargoConneCt 31

COVER STORY

Bharat J Thakkar, JMD, Zeus Air Sarvices Pvt Ltd

As a forwarder my wish list is always pro

While on the subject of EDI, it is not out of place to mention that India is a leader in this segment. Keeping this in mind the desire of industry is to implement EDI 100 per cent and move towards a paper-less environment. We must strive towards converting all steps in the entire process of electronic medium and one of the most important of them being amendments. It will also go a long way towards creating transparency, speed and efficiency resulting in seamless faster processing, reduce dwell time and transaction cost. This becomes all the more important when WTO Bali 2013 agreement becomes effective from July 2015 once 103 countries (two-thirds) sign. It is mandated at the Bali Summit that the current trade across barriers will transform into trade across borders. India is expected to sign in near future after the recently held Trade Facilitation Summit in New Delhi in March 2014.

Single window clearance: If we are to make our Exim competitive, the only way to achieve is to speed up the processing time of exports; it is prudent to ensure and make available the facility of a single window clearance for permission required prior to exports of pharmaceuticals, medicine, bulk drugs, leather products, amongst others. Currently, some of the processes are time consuming and takes at least one day and more at some locations. There are different agencies involved for clearances. This stretches the limited resources by putting them under severe pressure in order to prevent delays. A single window (all nodal agencies, i.e., ADC, Wild Life, Plant Quarantibe, FSSAI etc.) clearance facility will benefit all concerned. There should be no dual process of clearance for any particular mode.

24 x 7 CBEC: Top most priority should be accorded to overcome shortage of customs officers pan India at airports, ports, CFSs,

ICDs and very specifically at major airports, as any cargo facility is the economic strength of the country, while airports are show case of the country.

All customs airports must be connected by EDI: It is not understood why Calicut and Coimbatore airports are still not connected with EDI. • The lengthy filling up of shipping bills

manually and getting them processed physically through multiple officers.

• Travelling from air cargo complex to Deputy Commissioner’s office (which is 12 kms away) and time consuming and expensive to travel

• Delay in manual disbursement of duty drawback (it takes between six and 12 months)

• In case of Calicut schemes shipments like EPCG cannot be cleared by exporters and importers

• In case of Coimbatore EDI is only available for cargo flown on direct flights, which is a small portion, as major tonnages are moved by bonded via gateway airports, i.e., Bangalore, Chennai and Cochin. Inclusion of export related activities

in Service Tax negative list: In view to encourage exports for economic growth and making them competitive globally, applying taxes will be adding cost of Exim, resulting in it being uncompetitive in global competition. To comply with WTO requirements, we have withdrawn several schemes which were earlier assisting our exporters. Having said that the least we can do is not add on more costs for the Exim as all activities directly related to the exports of goods from India must be brought under negative list so that they can be exempted from application of service, as followed in Australia, UK, Singapore etc.

Frequent break down glitches in the EDI / System: Of late, system failure and slow down have become too frequent and this is a cause for great concern. While intimation is made available in the IceGate of system failures, there is a guideline from CBEC for manual mode to be adopted when there are system failures, recently during 9th-11th May at Chennai airport not a single s/bill no was generated until 12th May, which resulted in stoppage of work. There is reluctance on the part of customs to implement the board directive and hence trade suffers. For the better or stricter implementation there could be a monitoring system to allow by manual mode.

exim to collectively work with stake holders to reduce dwell time and bring down their transactions cost; it is desire and demand of our industry to make processes system driven without human intervention.

Use of digital signature in IceGate to be made mandatory: IceGate is the e-commerce portal of CBEC and gateway for processing all customs documentation related to exports or imports. It is the sole medium of transmission for processing of bills of entry and shipping bills. Exim also avails this facility to file their documents, make payments and track the status of their customs entry and shipment. It is now essential to make digital signature mandatory in IceGate; as this would be in keeping with Indian customs’ continued progress in EDI implementation and also in tune with many of the dominant 179 member countries of World Customs Organisation. India is a matured economy and most of the organisations in India now use digital signature pan India.

Electronic processing of amendments:

Page 6: Logistics industry’s wishlist

CargoConneCt - JUNE 201432 JUNE 2014 - CargoConneCt 33

COVER STORY

Gur Prasad Kohli, Managing Director, Wallenius Wilhelmsen Logistics (India) Pvt Ltd (WWL)

• Implement GST before 2016• Implement dedicated freight corridor for rail by 2016• Remove import duty on bunkers for coastal shipping• Reduce port tariff for coastal shipping

of this trend will seriously impact viability of both the Dedicated Freight Corridor and Delhi Mumbai Industrial Corridor projects.• NW Ports growing at approx 16 per cent

CAGR• ICD volume shows declining trend over

the past three to four years; growing at six per cent CAGR or less

• More ICD export cargo is shifting to road movement for aggregation at port CFS

• ICD import volume continues by rail resulting in imbalanced rail traffic and high cost of rail operation.

This results in:• Idling of massive infrastructure investments

at inland locations• Congestion on roads causing accidents• Environmental degradation• More land gets acquired for road expansion• Congestion at port gates affecting port

productivity and port expansion• Under-utilisation of ICDs and logistics

hubs in the hinterland• Imbalanced flow of containerised traffic on

DFC (more import and less export volume)

• Under-frame movement of freight trains leading to reduced number of trains on DFC

• Domino effect-transit time from ICD to port increases due to reduced number of trains

• Smaller ICDs are not served by rail leading to idle infrastructure

• Reduction in number of manufacturing hubs in the hinterland

• Migration of labour from hinterland to port areas

• Increased cost of labour in the hinterland due to labor shortage

• Shipping lines move focus from hinterland to port cargo (to control equipment turnaround time)

• The re i s a d i f fe re nce i n customs assessment policy in ICDs compared to port locations. Uniformity is required to reduce outflow of exports from ICDs to port CFSs.

• Immediate capping of new port CFS must be enforced. Even existing port CFS in JNPT and Mundra are underutilised. Further investment in this area would be a waste of investment.Apart from the aforementioned wishes

that the logistics industry has from the government, there are others that need mentioning, specifically to grow hinterland ICD business:

1) Fast complet ion of the wester n Dedicated Freight Corridor

2) Communicate the government’s plan for the Delhi Mumbai Industrial Corridor to relevant stakeholders in order to attract more investment

3) Lower cost of transaction and landed cost of cargo by rationalisation of rail freight

4) Service tax abatement facility should extend to shippers even when they pay rail freight through shipping lines.

The new government must take urgent and concrete steps to avoid further erosion of international cargo movement from rail to road. Policy makers need to understand the impact of unplanned infrastructure development in this sector. If not, outcome

Poroma Rebello, Head Commercial, North Central Region, APL India Pvt Ltd

Page 7: Logistics industry’s wishlist

CargoConneCt - JUNE 201434 JUNE 2014 - CargoConneCt 35

COVER STORY

As the new government is kicking off, the industry expects the following from the new government:

• Ro adway s : We hop e t h at t he new government is already aware of the infrastructure and takes up this as a priority by public/ private partnerships/ FDI etc. This will improve the delivery and fuel efficiency. The wear and tear of the vehicle also will be improved.

• Fuel prices: There should a mechanism to bring the price in line and control the escalation.

• GST system: Introduction of GST system.• Infrastructure in ports: For congestion

reduction, sufficient staff from customs to clear the goods in time will definitely cut down the cycle time to clear the goods from ports.

• Waterways: Promoting and developing coasta l t ransport for domest ic goods movement will become an alternative to roadways, where in the goods are transported up to 70 per cent. This will reduce the stress on fleet operators on road as they are finding it difficult to source the drivers. This will even reduce the traffic on roads.

• Railways: Develop and increase the railway connectivity and corridors.

• Tolls and entry taxes: These taxes are being changed at frequent intervals. The government should study and fix these charges for reasonable time.

• Interstate movements: The interstate permit charges are also to be kept under control. Harmonisation of taxes, procedures and policies across states is required to

faci l itate a seamless f low of goods and services. For example, if the vehicle is being travelled between Chennai and Kolkata, all the documents and taxes can be filed in Chennai and the inspection should be done and sealed. The same information and data can be transferred to en route check posts. The truck can be moved without interruptions on the way till its destination. This can save lot of time and money to the f leet operator as the inspection at each check post can consume more time and delays.

• Training institutes for drivers: Apart from fleet operators training and briefing to the drivers, the government should also take up certain responsibility for developing good habits to the drivers. The government should make some mandatory training programs for the truck and heavy vehicle drivers to promote good driving habits.

• Wa rehousing: The gover n ment should develop some warehousing parks for establishing warehouses at subsidiary rates. These parks can be promoted near sea ports/ transshipment hubs/ major industrial parks etc. This will encourage the 3PL providers to invest and offer warehousing services at competitive rates.

Irrespective of many challenges, there is a lot of potential and many opportunities for logistic industries. If the government provides support to the service providers, they can expect a quality and competitive services from LSP in line with global standards in future. We wish the same can happen in the new government tenure.

The new government is going to take over soon and we assume that the new government with absolute majority will favour enterprise, which will be definitely a boom for the logistics sector. Changing government policies and new regulations will play an important role in this process.

The freight cost in India is high compared to other countries like France, Japan, Canada, etc. As we all know that logistics cost is the contribution from inventory holding, transportation, packaging, warehousing, losses and related administration cost etc. by having good infrastructure, especially roadways, railways, waterways and airways, the transit time can be saved and which in turn helps to reduce the cost of logistics.

Min Joo, Managing Director, Glovis India Pvt Ltd (Hyundai Motor Group)

Leif Voelcker, Cluster Managing Director- South Asia, Geodis Overseas Pvt Ltd

O ur w ish l ist is i ncl i ned towa rd s the smooth and effective operations for the i ndustr y, we ex pect that the new government will bring much needed pace to the development of infrastructure with an improvement and upgradation of the road network in India. This will not only enhance the connectivity of the dry port to the gateway ports, it will also improve the transit time for domestic transportation, facilitating our customers to receive their goods at right time. We also hope for the expansion of the sea ports or airports and enhanced infrastructure of the alternate ports that can help in decongesting the

traditional gateway points. Also, the i mple me nt at ion of muc h-awa it e d GS T, wh ic h i s e x p e c t e d t o h ave a posit ive i mpact on t he log ist ics network of India, is needed. We also expect to have further clar ity from the administration on the taxation st r uct u re s uch a s s e r v ice t a x for t h e f r e i g h t fo r w a r d i n g i n d u s t r y and pr udent approach towards the international tax structure. We are hoping for due support from the new government in removing hurdles for the industry and strengthening India’s position on the global platform.

Page 8: Logistics industry’s wishlist

CargoConneCt - JUNE 201436 JUNE 2014 - CargoConneCt 37

COVER STORY

Samir J Shah, Partner, JBS Group of Companies

Main agenda:• Recognition of Logistics as a separate

industry- Allotted participation as an industry in

the Planning Commission and other initiatives of the government

• Encouragement in terms of a fund or policy for popularising logistics as an industry so that it may be called as a career option for the youth of the country

• Encouragement in terms of a fund or policy for training and skill updating the existing workforce

• Introduction of GST: Single not multiple as proposed as soon as possible

Additionally, the government should look into the following:• Immediate funding and execution for

upgrading the hardware and software at all customs locations

• Capacity building within the government• Linking of all stake holders on a common

platform and a time-bound programme to achieve paperless working

• Compulsory introduction of software systems at all tolls or check posts to ensure smooth movement of vehicular traffic

• Development of standards for a l l logistics infrastructure and services

• Subsidy for all logistics companies for various certifications.

taxation between the Central and State Government so that efficiency increases in the business as ‘Logistics is all about Time and Material Management’.

Also implementation of GST will greatly impact cost and the way business is being done by Logistic Service Providers (LSPs) today.

To d ay, a L SP h a s to pl a n for t he warehouse depending on the customer requirements matching the state tax laws criteria. This leads to high cost of operations as infrastructure, manpower etc. have to be set up independently and also the capital cost employed is high.

With GST in place, warehouses would be set up keeping in mind the operational efficiency, distributions patterns and to leverage the economies of scale. This is a ‘Win-Win’ situation for the LSPs as well as the customer as LSPs will have better control on operations deliverable and also customers will be enjoying the benefit of low cost of operations.

Control l ing inf lation: Taming the inflation and lowering the interest rate is next big thing which of importance not only for the logistic industry but across segments of the industry. Availability of more capital (at lower interest rates) will lead to infrastructure development so that across sectors there is growth in hiring and more people have jobs in hand.

Hope ‘development’ and ‘good governance’ are no more words merely but experiences by every Indian.

GST implementation: It has been ages we have been hearing on implementation and roll out of GST. Today while Europe as a continent has borderless entry and exit, we in India have set up check points and barriers within the state borders impacting the smooth flow of commercial vehicle. Not only this leads to unnecessarily delays of inventory stuck up at the check post but also to wastage of already fast diminishing resources like diesel as trucks have to be in long queues awaiting clearances. And also the fact that these check post and check nakas have given r ise to ‘bureaucratic controls’ and corruption.

Need of the hour is to simplify the

Sanjeet Walia, General Manager-Business Development, M.J. Logistics Services Ltd

Page 9: Logistics industry’s wishlist

CargoConneCt - JUNE 201438 JUNE 2014 - CargoConneCt 39

COVER STORY

Multimodal Transport Act, amend Cabotage Law, etc.

• Immediate need for improving warehousing and cold chain scenario in the country: One of the major problems that our new government should take into account is the lack of sustained investment in both the sectors (i.e., warehousing & cold chain sector). The private sector initiatives in these areas are still small and sporadic. More and more PPP models need to be adopted to address this issue.

• Need of active support in acquisition of land: The new government should provide active support in acquisition of land for setting up facilities for cold storages, warehouses and food processing centres; more incentives should be provided to the entrepreneurs on land acquisition so that they can be encouraged to invest in these sectors.

• Need for creating scientific storage facilities at the rural door step: There is an utmost need of creating scientific storage facilities for the farmers near their door step to avoid heavy storage losses in the agricultural produce. Rural warehousing needs a boost.

• Focus on development of reefer related infrastructure in the country: Special emphasis needs to be laid on development of reefer-related infrastructure in view of India’s export thrust and potential. Much time has already been lost in this direction. Additional infrastructure could be developed at ICDs at Delhi, Bangalore, Pune, Hyderabad, Guwahati and ports at JNPT, Madras and Cochin. It is felt that the above mentioned ports and ICDs and their hinterlands are most suited to exploit the exports of perishable cargo.

• Focus on construction of temperature-controlled storage facilities at major airports: Most of the Indian airports are not able to ensure cold room space despite getting advance notices from the freight companies about possible unloading of large consignments of temperature sensitive products. This needs a special attention. There is also a need for cold chain bonded warehouses near the ports and airports. Further cold chain dollies need to be provided at all international airports for movement of temperature-sensitive cargo from airport warehouses to the tarmac where aircraft is parked.

•Domestic reefer market should be encouraged: Domestic manufactur ing should be encouraged in the country. The domestic reefer market is large and could prove as a catalyst in growth of transport of

Suggestions for improving logistics scenario in the country:

• Need for an apex body for the promotion of the logistics sector: The new government should set up an apex body for management of the logistics sector cutting across several ministries, and should enable India to develop logistics at par with world-class standards and also help in accelerating and deepen its external trade ties. Such an apex body should have a say in all inter-m inister ia l matters as a lso interstate matters.

• Need for infrastructure development: Intermodal or multimodal transport builds on the operational efficiencies of the transport system. Without adequate infrastructure, the incremental benefits of intermodal transport will be negligible. Necessary infrastructure development to provide for compatibility between modes, less friction costs, low dwell times, less pilferage and increase in containerization is basic to growth of multimodal transport.

• Development of more and more logistic hubs, ports: Both ports and the road or rail network are presently working above their designed capacity. Hence more and more logistic hubs, ports and necessary infrastructure should be built to avoid congestion.

• Inland waterways transport: Inland waterways transport needs to be prioritised and leveraged for multimodal hubs.

• Strea m l ining the ta x system: Elimination of CST, adoption of GST, amend

R. S. Bedi, PS Bedi Group & Chairman of Task Force on Logistics Management, PHDCCI

fruits, vegetables, fish and other horticultural products. The required equipment and technology for insulation, cooling and the basic reefer technology should be obtained from leaders abroad. Import duties on components and equipment should be reduced.

• Ardent need of capital investment in rail support equipment to move reefer containers: Provision of fast, scheduled, refrigerated container block-trains, etc. should be there.

• Focus should be on development of multi-chamber cold storages in the country: Challenge is to move from single commodity (Potato) cold chain to cold chain for high-value products (for example, Kiwis, Citrus, Grapes, Lychees, etc). There is an ardent need of developing multi-chamber cold storages to support diversification and value addition in the cold chain sector in our country.

• Need to create mechanism for financial viability of cold chain projects: Financial viability of cold chain projects has emerged as a serious issue and that should be taken into account for consideration. New ways of structuring like take-out financing, roll over financing, put-call options, hedging or swapping of exchange or interest rate risks etc, can be offered for funding of long gestation projects. All these steps might boost up the confidence and encourage private investors to invest into the cold chain business.

• Need for Amendment in APMC Act: Only 17 states have amended the APMC Act to allow direct marketing, contract farming and markets in private and cooperative sectors. Key grain producing states such as Haryana, Punjab and Madhya Pradesh have initiated only partial reforms. To meet the three-pronged objectives of providing remunerative prices to farmers, it is necessary to strengthen supply chain efficiency and ensure end consumers are charged fair and reasonable prices; it is imperative to revisit the Model APMC Act.

• Need for more trained manpower in the logistics sector: Logistics, warehousing & cold chain industries are facing a huge shortage of adequate and relevant human capital to manage and operate the whole system. The new government must ensure that NSDC does more for this sector. The Sector Skill Council has to be tasked to lay down the industry standards in a time-bound manner and the focus should be on opening more and more specialised technical institutes where relevant job training can be imparted.

Page 10: Logistics industry’s wishlist

CargoConneCt - JUNE 201440 JUNE 2014 - CargoConneCt 41

COVER STORY

Jeevan Rao Sahib, CEO, Indelox Services Pvt Ltd

I expect that the new government: • Understands the role of the logistics and

supply chain functions and accord it the status of an industry.

• Revamps the independent m in istr y into one ministry which includes rail freight, highway road, port, airport, infrastructure in hinterlands to provide a consol idated focus. Th is business is l a rge ly ser ved by SME, suppor t qualitative improvement in managing and skil l development for the people, make avai lable at concessional rates

i n f rast r uct u re for wa rehouse or admin blocks or satellite complex near highway for road transport.

• Speeds up the rail freight corridors and also improves road on similar line to Golden Quadrilateral for a high-quality transportation system.

• Make available cheaper finance which the foreign enterprise is capable of and provides level playing field while it has opened the sector for 100 FDI; Indian enterprises are at a very disadvantaged position.

movement of goods seamlessly across the country. This will be the catalyst to a modern supply chain in India.

• Revise economic growth forecasts: Sentiments are an important and integral pa r t of decision ma k i ng. Better tha n ex pected forecasts w i l l l i f t consumer sent i ments lead i ng to bet ter m a rket demand. This will have a positive impact on the business climate and will also help the logistics industry.

• Reduce fiscal / current account deficit: Rising deficits have compelled the government to announce many control measures a nd mecha n isms lead i ng to cu r re ncy depreciat ion a nd i n f l at ion .

• Modernise infrastructure: A recent study by a leading consultancy house, mentions that $45 billion is lost each year due to inefficiencies in India’s logistics network. Improving transport infrastructure, m o d e r n i s i n g a n d s e t t i n g u p m e g a warehousing, enabling access to larger trucks, reducing documentation bottlenecks, setting common standards, ensuring consistency in containers, pallets, cranes and material handling equipment will boost industry-wide collaborative trade, reduce costs and drive economic growth while greening the entire network.

• Implement GST: GST has been a long pending demand from the industry and we believe that this government with a clear mandate can accelerate implementation. It will ensure efficient storage, handling and

Devdip Purkayastha, President, CHEP India

Control on this account wi l l stimulate consumption as interest rate fall and the rupee stabilizes. Automotive industry will receive a much needed boost and rate-sensitive industries wil l benefit in the short term.

• E a s e l a n d a c q u i s i t i o n l aw s : Industrialisation requires vast tracks of land as do modern warehousing. A progressive land acquisition regime and laws which are environmentally friendly yet industry positive will help drive economic growth, development of massive warehousing and cold chain capabilities, modern retail which will ultimately benefit the industry, the end consumer and ultimately the country.

Mahesh Trikha, Managing Director, Aargus Global Logistics Pvt Ltd

• Simple taxation with regard to Service tax may be VAT is an answer

• Recognition as industry• The industry should be under one

ministry• Freight village at airports• Needs much improvement on EDI

systems at customs and someone needs to be accountable.

Page 11: Logistics industry’s wishlist

CargoConneCt - JUNE 201442 JUNE 2014 - CargoConneCt 43

Vinod Asthana, Managing Director, Central Railside Warehouse Company (CRWC) Limited

Vineet Agarwal, Managing Director, Transport Corporation of India Ltd

Logistics infrastructure of the country needs urgent refurbishment. The sector is plagued with inefficiencies and high costs. The priority areas that we feel that can take the sector forward include:

COVER STORY

this growth momentum in years to come but there have been constraints due to inadequate infrastructure and incentives to the industry.The major constraints have been:(a) Need for an integrated logistics policy

so as to standardise and integrate different modes of transport

(b) Cold chain based warehouses need support and encouragement to reduce wastage of fruits, vegetables and perishable cargo, integrated into logistics park

(c) Rationalisation of taxation structure to encourage logistics sector. GST when implemented will encourage the development of mega warehouses and support smooth movement of goods across the country. This will provide economy of scale.

(d) Availability of trained manpower in both the third party logistics sector and both the manufacturing and retailing sectors are weak and need to be put to next higher level.The disorganised nature of the logistics

sector in India requires development of specialised training institute and R&D in equipment for cargo handling besides other related issues like IT etc.

India has voted for economic growth and prosperity in the hope for change. With great power comes great responsibility. As a progressive business community, we should stress on strategic planning and dialogue with the new government on revival of business and investors’ sentiment in the country. We are hopeful of policy moves like introduction of GST, fast tracking of stalled projects and opening up of FDI which will give a new fillip to the logistics sector, the backbone of trade and economy. New and improved roads, rails, ports and freight corridors will make logistics and supply chain management more efficient and boost coastal shipping.

Shashi Kiran Shetty, Executive Chairman, Allcargo Logistics Ltd

The Indian logistics industry is poised for a significant growth in the coming years as the scenario in the country has changed drastically over the years and the demand for logistics services in India has been largely fuelled by consistent growth of economy and key industries such as automotive, engineering, pharmaceuticals food processing, retail and there is need to ensure smooth flow of goods.

Though the logistics industry has been witnessing buoyant growth and will continue

• An industry status and an integrated policy for the logistics sector: Logistics itself is a large industry but is plagued with various inefficiencies and high costs. An integrated approach across multiple stakeholders across central and state governments is required. TCI suggests setting up a separate regulatory authority for the logistics sector on the lines of the Insurance Regulatory & Development Authority or Telecom Regulatory Authority of India.

• Increased focus on multimodal transportation: Logistics infrastructure is a critical enabler of India’s economic deve lopme nt . The count r y ’s net work of road s, ra i l a nd water ways w i l l be i n s u f f ic ie nt a s f r e i g ht move me nt i s set to increase about three fold in the coming decade. This shortfall in logistics infrastructure will put India’s growth at risk. Since a large part of India’s future logistics network is stil l to be built, an integrated and coordinated approach in which the development of each mode-

railways, waterways and roads- is matched to the needs is the need of the hour.

• Long-term planning and financing for the sector: Presently, transportation and logistics companies are not eligible to go for cheaper foreign currency funding by way of External Commercial Borrowing (ECB). ECB borrowing should be allowed to transportation/logistic companies for the purpose of investment into commercial vehicles, ships, construction of logistics warehouses, etc. Access to ECB will help save on interest part as margins in this highly competitive and fragmented industry are already too low and under pressure. There is also a need to treat warehousing for non-agricultural commodities at par with infrastructure projects to encourage investment in warehousing industry.

GST should be i mplemented w ith immediate effect to enable the creation of the common market to permit free and unimpeded movement of goods and services across the country.

Page 12: Logistics industry’s wishlist

CargoConneCt - JUNE 201444 JUNE 2014 - CargoConneCt 45

Harpreet Singh, Director, Sales and Marketing, TNT Express

L i ke a ny other i ndustr y there a re challenges that we are facing in terms of existing practices and some regulatory issues. Two issues that we would like to the new government to look into are:-

• Reduce congestion at airports: One of the major factors that goes into choosing a hub for an express logistics company is the level of congestion that an airport experiences. The more the air traffic in an airport, the higher the turnaround time for an express logistics company to deliver its cargo. The European Association for for wa r d i n g, t ra n sp or t , lo g i st ic s a nd customs services, CLECAT, distinguishes congestion into occasional and structural. T h e l a t t e r s t e m s f r o m i l l - a d a p t e d infrastructure which is insufficient for the level of traf f ic within the physical and environmental constraints, or due to technical compatibi l ity. Solutions such as enhancement of infrastructure, use or promotion of fully interoperable loading

units and targeted use of infrastructure pr icing pol icies in the major Indian airports will definitely benefit logistics service providers.

• Improve cargo handling and clearance services: A teething problem that express logistics service providers have faced in Indian airports is the amount of idle time spent during the hand l ing and clear ing of its cargo. Multiple screening processes, opening of sensitive cargo, disparity and unclear HS codes and rough handling are some of the few issues that have clients of express logistics companies indignant towards the service providers. If the express logistics service providers could work with the customs department to frame a set of policies that uses the insights that throw light into the problems that the industry faces because of this it would help creating a reason to be a trusted express logistics service provider.

COVER STORY

S L Sharma, Founder, Skyways Group and President ACAAI

The logistics sector in India has today become an area of priority. India is expected to become the third largest aviation market in India by 2020. The new government is likely to take a relook at the country’s logistics Sector. Poor performance of the country’s industrial sector has become a cause of concern for the policy makers who are looking for ways and means to create

jobs. Today, the air cargo industry in India is one of the industries that is progressing with leaps and bounds and time is not far when it will be counted among one of the f lourishing industries of the world. Logistics facilities, in the growth of the Indian economy, is a vital contributor.

We expect that the growth in Indian economy has resulted in a significant rise in the volume of freight traffic moved. This large volume of traffic has provided for growth opportunities in all facets of logistics including transportation, warehousing, food supply chain, freight forwarding, express cargo delivery, container services, shipping services, etc. The global outlook is set for growth after years of declination.

We are expecting double digit growth in exports and target of US $750 billion by 2019. There will definitely be growth in the logistics sector. But the new government must focus on the following issues particularly the infrastructure.

(a) Advance technology – at par with the global standards

(b) Focus on services, exports, E-commerce. hi-tech products

(c) New foreign trade policy should be

initiated; measures for competitive manufacturing in the country

(d) Most importantly, we must improve our infrastructure at international level. The focus should be on energising the Public Private Partnership model

(e) Availability of electricity for MSME – manufacturing with concessional rates.

(f) Focus on international trade will provide required inputs to the Indian economy

(g) Credit availability to the sector with international benchmark rates

(h) Effective coordination with states

(i) Action on the Taxation side - the Goods and Services Tax and the Direct Taxes Code

(j) Free Trade Agreements must be promoted

(k) Need to make the supply chain faster, cheaper and more efficient

(l) The manufacturing policy needs lot of improvement – Single Window Clearance be implemented as per world class standards of other countries who have introduced Single Window Clearance successfully

(m) To reform Labour Law.

Page 13: Logistics industry’s wishlist

CargoConneCt - JUNE 201446 JUNE 2014 - CargoConneCt 47

COVER STORY

5. Last mile connectivity and terminals• Expedite the approval processes with a

view to providing time-bound clearances• Creation of a dedicated cell for approvals

6. Speed up the process for implementing key infrastructure projects for new wagon manufacturing units that have already been announced.

Vendor RelationsKey issues in this area include:• Delay or stoppage of vendor payments• Deferment in delivery requirements• Po s t p one me nt a ga i n s t c om m it t e d

purchase orders 1. There is a need to specify time frames for

making payments to vendors, releasing long standing dues already incurred, and waiver of certain replicated requirements for pre-approved vendors to ensure against financial distress already being faced by many rail suppliers.

2. Improved order management• Improved time taken in decision making • Clear picture on production plans to

enable manufacturers or vendors to plan their capacity and infrastructure investments

3. Procurements on ‘life cycle cost’ as a concept

4. Long term contracts5. Zero tolerance towards safety and

accidents 6. Energy-efficient initiatives7. Technology in rolling stock

Tax and freight issues:1. Freight charges • Change in classi f ications or f reight

charges should be periodic • Intimate proposed changes in advance to

industry 2. Debit or credit hours for demurrage

charges3. Premium customers4. Service tax exemption on input services5. Refund of accumulated CENVAT credit

on projects which have subsequently got exempted from Service Tax

6. Duty and Excise Duty concessions7. Equalisation of differences in price basis

for imports and indigenous purchases and parity in price comparisons

8. Price Variation Clause in projects and time-bound implementation.

Some of the key areas that the new government will need to address through various policy initiatives of the railways include:• Major capital works like the DFC project• Investment in rolling stock• Providing improved terminal access• Improvements and investments in the

last leg connectivity between the rail network and the cargo loading and unloading points.

Suggestions for addressing key issues:1. Improvement in existing PPP structures• Putting in frameworks for RFQ, RFP and

concession agreement templates• Consultative mechanism for stakeholder

interaction is needed to enable Indian Railways to attract greater investment

• Create a strategic pol icy framework that addresses third-party rail based transport and logistics services.

2. Ti me b ou nd i mplement at ion for capacity enhancement works

• Time bound finalisation of the tenders• Tenders for large size integrated packages

should be processed• Tender approval powers of GM of Zonal

Railways should be increased.3. Station modernisation projects and

high-speed corridors4. Scoping of tenders• Remove non-core activities from project

scope

Manish Puri, Managing Director, IndiaLinx

More to be looked at1. Major concer ns rega rding India n

Railways development:• Improved project implementation• Need for streamlined and time-bound

approval processes• Providing terms in projects that will

a l low investors to gain ‘ reasonable’ returns on capital

• More efficient vendor management2. Marginal investments that can be

achieved within a short span of time for capacity augmentation

• Increase production at IR’s production units by ramping up scale and capacity

• Using technology to optimise planning and improving utilisation of rolling stock

• Strengthening the current logistics and PPP policy of the railways and make it more industry friendly

3. Long-term measures:• Heavier, faster and longer trains • Need for i n novat ive t y pes of t rack

structures, for example, introduction of 30-35 axle load track

• Create infrastructure for better cargo handling at terminals

• Double stack containerisation and roll-on-roll-off trains

• Improved wagon designs – larger wagons to meet heavy haul requirements

There is an increasing need being felt for the creation of a formal interaction mechanism with the railways for regular interaction to take up matters related to policy and strategy.

Page 14: Logistics industry’s wishlist

CargoConneCt - JUNE 201448 JUNE 2014 - CargoConneCt 49

COVER STORY

pol ic ie s a i med towa rd s b o ost i ng the air cargo growth meeting global industry benchmarks. Government support in this venture would play a very important role. Air cargo logistics is h igh ly t ime sensitive and, thus, processes should be such that they provide both speed and economy to the cargo at every step of the air cargo supply chain. Each link of the chain has to be efficient. Trade fraternity expects from the government highly favorable and efficient trade policies leading to simplified and faster processes meeting the global benchmarks aimed towards overall economic growth.

Today, developed air cargo hubs work on a very efficient model of cargo operations. They manage very efficient dwell time in the range of three to five hours providing more space and efficiency at the airports. This comes through both efficient operations and efficient processes and policies. As ACFI, our aim will be to take up with government such policy improvement initiatives to facilitate air cargo supply chain stakeholders to achieve such global benchmarks.

A nother i mpor ta nt focus is to eliminate use of paper from the cargo processes starting with the paper work at terminals. ACFI has been successful in achieving the same in some of the processes at Delhi airport as a pilot case. Technology should replace paper and ACFI has an agenda to ‘Go Green’ while being responsive to saving the environment.

E f f i c i e n t i n f r a s t r u c t u r e a n d operations is also another area where t r ad e i s lo ok i n g for gove r n me nt support. For instance, in India trucks travel to approximately 500 kms a day in general whereas in other developed countries trucks can travel up to 900-1000 kms a day or even more. We need to reach to this level. ACFI agenda will be how to bring process efficiencies in the system and influence government for an efficient infrastructure.

ACFI is very positive and optimistic working with the new government on air cargo trade policies improvement a i med towa rd s ove ra l l t rade a nd bringing efficiencies in the system at par with the global benchmarks.

India is poised as one of the fastest growing economies of the world where the Indian air cargo trade and logistics industry plays a very significant role in its economic growth and progress. Around 30 per cent of the total international trade in terms of value moves by air and a proper focus is required to be drawn towards the valuable contributions of the air cargo industry for the growth of national and international trade as it faces lots of challenges on its way at every step of its chain of operation.

With the new government coming in, trade is highly optimistic and looking for new developments in infrastructure sector, trade promotion with a very positive impact on the Indian economic growth. There are quite a positive developments happening in India enhancing the air cargo infrastructure for the supply chain. With developing infrastructure, ACFI focus shall now be to facilitate promotion of trade friendly

Pradeep Panicker, President, ACFI and Chief Commercial Officer (Aero), Delhi International Airport Pvt Ltd

Samar Nath, CEO, DHL Global Forwarding

• Focus on infrastructure development (cold storage, ports, airport & road) and their regular progress follow up.

• Implement GST for increasing trade and within a timeframe.

Vikas Anand, Managing Director, DHL Supply Chain

• GST implementation• Momentum on road construction• Investment to overcome congestion of

airports / ports• FDI In multi-brand retail (though this one

looks tough)• Incentive to replace old vehicles on

the road• Speeding up execution of industrial

corridors l ike DMIC (Delhi Mumbai Industrial Corridor)

Page 15: Logistics industry’s wishlist

CargoConneCt - JUNE 201450 JUNE 2014 - CargoConneCt 51

COVER STORY

to all the stakeholders not only in India but to our foreign trade partners as well. IATA initiated e-Cargo globally and Ministry of Commerce initiated e-Trade in India. We have made some progress but still not there and in case we can have a timeframe, it will be a real boost for us as a country.

(2) The entire process needs to be connected with each other in EDI mode; today we are all working nearly independently but without being able to converge with other stakeholders, it should be like manufacturing of potato chip that you just put the potato on one side and you get the well packed ready to eat pack on the other side. In other words, once the EDI process starts for export or import then we should not have any manual intervention in the whole process.

In today’s scenario, we have one process on EDI then manual and again on EDI so this breakage should be out of system.

(3) We need to have separate and independent new customs act for air and sea freight as the act is nearly 50 years old and though it has been amended from time to time but still the concept is based on sea and air jointly. The most urgent shipments are moving by air and therefore in terms of volume it is not even two per cent of sea freight but value wise greater than 35 per cent, so this justifies that air module should be totally based on current minimum process and keeping the e-Cargo in consideration. We also need to consider trust and it should be based on random checks rather than routine checks.

At the outset, would like to thank and highlights the initiatives taken earlier by the various ministries so far, i.e., Air Cargo Logistics Promotion Board by MOCA, e-governance for Civil Aviation Project by DGCA for complete automation of all the processes of DGCA, regular meetings by BCAS, customs 24/7 initiative and various others airport operators etc.

As wishes have no end, we would like to highlight few as under:

(1) The most important is e-governance out of all as it will automatically give comfort zone

Vipan Jain, Chairman BAR (I) Cargo Committee – N.R. & Regional Manager, Logistics South Asia & Middle East, Lufthansa Cargo AG

(4) We as Indians are mainly into IT export with expertise of people. However, our own system needs more attention in terms of 100 per cent reliability with back up and speed, probably we have more than required processes in place which are overloading the system with multiple data.

(5) We should make a study within India to adopt the best practices for all the processes including documentation required for airport operator, BCAS, customs etc., and have an open dialogue to reduce the complexity. Our systems are well designed, but we need to look wherever we are over doing with the processes.

(6) Hub development still remains our dream and hopefully we will push it further to have our India on the world map. We need simple process for air-to-air connectivity to promote Hub, and once we are able to tackle it, next step should be multimodal later.

(7) AFS (Air Freight Station) concept in real terms is also a high expectation for final delivery at the airport that is still only under discussion.

Ravinder Sethi, Managing Director, RE Rogers India Pvt Ltd

It is globally and historically known that exhibitions provide the first window for direct foreign investments. There is a dire need for state of the art venues in the country today. Also is there an immediate need for massive upg radat ions of the existing facilities. Around the world, it is the government which takes the initiative in land investments for such projects. Today, Germany and China are prime examples of how they are able to bring the world to their doorsteps. Plans to revamp the existing mega facilities in Pragati Maidan are on the cards - these should be put on a fast track. The DIPP mammoth venue project at

Dwarka, as part of the DMICDC, should be implemented at the very earl iest. Besides these, the immense need for venues in Mumbai and several second-tier cities should be on the cards. Delhi, Mumbai, and Bangalore should take over the role of Dubai and Singapore in the entire Mid-East or Asia-Pacific region. With their existing infrastructure in place, the cargo facilities of these three cities can easily expand their capacities. India’s position in the trading sector would make phenomena l ga ins – it doesn’t need a super analyst to figure that out.

Page 16: Logistics industry’s wishlist

CargoConneCt - JUNE 201452 JUNE 2014 - CargoConneCt 53

COVER STORY

which is morally not tenable for a democratic government. Hence, we call for a complete scrapping of toll taxes. It is a sorry state of affair that for just collecting about `8000 cores the transport industry is suffering losses to the tune of `70, 000 crores and also paying more than `10, 000 crores to the contractors in extortions.

We request the new government to institute detailed research and studies on the losses caused by unnecessary hold ups at toll plazas and state barriers (so called ‘check nakas’ or ‘check posts’) and road accidents due to stress on driver etc. considering the fact that the overall cost to the economy in terms of fuel, time spent in these hold ups, extortions and harassment is much more than what the government calls as tolls.

Social security for driver and crew of commercial vehicles: Drivers are the backbone of road transport industry and their labour is a pre-requisite for running the wheels of the nation’s economy but sadly the numbers are dwindling fast in the driving profession. A driver is vulnerable to a myriad of health problems, death due to accident or disease, overwork and fatigue. To make things worse for the driver of a commercial vehicle, he is

There are a lot of expectations from the new government and as the National President of All India Transporters Welfare Association; an apex body that represents the Indian Road Transport Industry, the new government is requested to look into the following matters that concern the road transport industry:

• Barrier free and seamless movement of goods: We believe that no truck should be stopped on roads unless there is credible cause for such stoppage and unless the same is certified by a senior officer for alleged violation. Also that the carrier or trucker should not be in any way responsible for any compliances related to the goods carried by the GTAs. All entries, forms, bahati and transit compliances should be based on the invoice and other papers issued by the consignors before start of the journey.

The existing average journey by an Indian truck is merely 300 kms per day which needs to be increased to at least 600 kms per say, if the bottlenecks are removed in the interest of nation’s economy, otherwise there is no gain in investing thousands of crores in highways and road networks.

• Scrapping of tolls: The present toll policy of the government has been devised without participation of its stakeholders, viz., road transport industry, which has resulted in chaos, agitations and violence at toll plazas. The industry believes after collecting multiple of taxes from transporters and the public, it is the duty of the government to provide good roads and highways. Charging tolls for road construction is a ‘double whammy’

Pradeep Singal, Managing Director, GIR Logistics and National President, AITWA

neither financially secure nor there is any driver-specific social spending under union budgets. This utter neglect and lack of any social security like affordable life and health insurance, pension schemes, retirement benefits, etc. have resulted in an alarming shortage of truck driver to the tune of 16 to 18 per cent. Obviously, the road transport industry is still an unorganized sector with no lobby or godfather in the echelons of power. No government, till date, has cared for them and they remain bereft of any social security, whatsoever. Any driver having commercial license should have social security for accident or natural death etc. like life insurance and one time premium can be taken at the time of registration in central pool with matching grant from government. This will help in bridging shortage of drivers.

• Primary health centre: There is only talk about providing basic amenities on our highways for rest, food and emergency care of drivers. Even the toll concessionaries who have contractual obligation to provide such facilities at the toll plazas have failed in fulfil ling their legal obligations. The showpiece ambulance and emergency care on NH-8 have not been replicated elsewhere. We need at least 150 strategically located primary health centres in the country in order to provide much needed facilities to the drivers.

• Driver seva kendras / transport hubs/driver training centre/logistics schools to be tax exempted: All driver seva kendras / transport hubs / driver training centre / logistics schools etc. should have 100 per cent tax exemption like R&D expenses. This is to attract finance in these areas.

• Tax reliefs and exemptions: As we pay multiple taxes, this industry needs relief in the matter of excise on trucks, CENVAT (not allowed due to abatement) welfare of drivers and workers etc. We, therefore, ask from the new government for 100 per cent deduction on Driver Welfare Expenditure and 100 per cent depreciation on trucks in the very first year of purchase. To encourage establishment of driver seva kendras, we ask the government to grant central subsidy.

• Recognition as an industry: It is a paradox that an industry which provides livelihood to millions has been recognised as an industry, thereby, losing many advantages that an industry enjoys. This is a grave injustice to this industry which provides employment to lakhs of semi-literate and even illiterate citizens of our country.

Page 17: Logistics industry’s wishlist

CargoConneCt - JUNE 201454 JUNE 2014 - CargoConneCt 55

COVER STORY

structure in warehousing & logistics industry: The immediate challenge is to define ways to extend support to the unorganised warehousing market – smaller players with l imited resources, who are mired with several complexities as they can slacken this growth story.

• Boost international trade: Demand drivers for warehouse development are increasing international trade and the resulting planned investment in ports for upgrading container traffic handling capacity, increased use of containerisation for i n l a nd t r a n s p or t , i nve st me nt i n manufacturing activity in Special Economic Zones (SEZs), planned investments in Free Trade Warehousing Zones (FTWZs), development of dedicated Freight Corridor,

Warehousing and logistics will be a gate valve that will control the ebb and flow of products between the producing and consuming functions of an economic pipeline. In my opinion, a robust warehousing and logistics infrastructure is the life line of a fast growing economy.

There is a pressing need to enhance cargo capacity at airports, create modern agro warehouses that are critical for sustaining agriculture, propagate integrated cold chain into rural & urban areas and establish quality standards and benchmarks, which I am sure our new government has considered.

My expectations from our new government in warehousing & logistics front are:

• Facilitation of ramping up of logistics infrastructure: India’s current logistics infrastructure is inadequate to meet growth aspirations. A 2.5 times increase in the freight traffic in the next decade will put further pressure on India’s logistics future. Ramping of logistics infrastructure will stimulate and sustain business growth.

• Focus on warehousing sector: In the complete logistics value chain, warehousing forms a very important link as it constitutes over 20 per cent of the tota l logistics market. Strength of India’s warehousing and logistics sector is likely to be one of the key determinant of the pace of future growth of Indian economy. There must be a specific focus to give a boost to the warehousing sector and modernise it to international standards.

• Issue policies that bring about

S A Mohan, CEO, Maini Materials Movement Pvt Ltd

change in government regulations related to State Sales Tax, emergence of organized retai l and its need for ef f icient supply chain management and growing trend of outsourcing logistics function to third party logist ics (3PL) ser v ice prov ides to reduce cost and increase ef f iciency, recognition of warehousing as a strategic tool, etc. Increased international trade will give impetus for strategic investments in warehousing sector to build next generation warehouses and operate them in-line with global standards.

• I mple m e nt at ion of G S T: The Goods & Service Tax (GST) is expected to be the next big bang fiscal reform by the Indian Government. This will lead to the abolishion of almost all indirect taxes incurred by companies and customers. With the introduction of GST the key advantage for all logistics companies will be merging of small warehouses to one productive warehouse. We will witness centralised and large warehousing parks that are more agile, operate on economies of scale, present huge cost advantage to companies thereby contributing to countries economic growth. Perhaps, the onset of GST, with its potential to revamp the national warehousing network could be considered as the single largest industry-wide opportunity to consider smart warehousing as a cost-saving opportunity across the supply chain.

I am sure our new government wil l f u l f i l l these e x pectat ions a nd create an environment for graduating Indian warehousing & logistics market to offer value propositions.

G Balaraju, Chairman & Managing Director, Sindhu Cargo Services Private Limited

• Speedy infrastructure development by bringing various departments or ministries concerned with highways, ports and airports under one ministry.

• Accord industry status to logistics industry and consideration as priority sector by financial institutions.

Page 18: Logistics industry’s wishlist

CargoConneCt - JUNE 201456 JUNE 2014 - CargoConneCt 57

COVER STORYCOVER STORY

of roads in comparison with China is well below expectations and our poor hinterland connectivity is affecting the trade growth in our country. High transaction costs arising from inadequate and inefficient infrastructure can prevent the economy from realising its full growth potential irrespective of the progress on other fronts. The sooner our new government takes some concrete steps to improve this situation, the better it would be.

• To susta i n g row th, Ind ia need s sig n i f ica nt i nvest ment i n deve lopi ng road, rail and port infrastructure in order to faci l itate quicker and more efficient movement of goods across the country. The government must take serious steps in this direction on an immediate basis.

• The new gover n ment must look at up g r ad i n g t he s upply c h a i n a nd logistics industry by setting standards and accreditation procedures for all the firms operating in the industry. Also, the government should focus on the creation of special tax provisions to encourage private sector investment in infrastructure. We expect that our new government implements GST as early as possible, because it would solve the issue of unorganised and fragmented small godowns spread across the country.

• Further, the government must ensure that documentation at check posts is computerised and reduced to a minimum, so that less number of forms are needed. A uniform toll policy should be implemented across the country. Multiple toll points on

• The new Indian government must enhance its focus towards the growth of supply chain and logistics sector by taking some concrete measures. To begin with, we expect our new government to put a major thrust on infrastructure development and to take special initiatives for faster development of roads. It should encourage private and FDI inflows into infrastructure and must ease regulatory hurdles in order to facilitate building up of world-class infrastructure.

• The present pace of road infrastructure development in India is slow vis-à-vis other developing economies. The quality

Vineet Kanaujia, Vice President-Marketing, Safexpress

highways reduce efficiencies and adversely affect the turnaround time of trucks. A centralised toll mechanism is needed to ensure uniformity in the toll charges paid by truck drivers at various check posts.

• The government must expedite the development of the rail-freight corridor to boost the rail freight business. Modernisation of railway terminals as well as handling facilities should be a priority for the authorities. The government must ensure that there are time-scheduled freight trains on all major routes.

• There is an enormous shortage of skilled manpower in the supply chain & logistics sector. There is a scarcity of theoretical knowledge as well as practical expertise in this business. This leads to low skill levels that could hinder the growth of this sector as well as the economy. We expect the government to acknowledge the requirement of skilled manpower for our sector and to focus on the augmentation of skills by developing academic institutes and by introducing specialised courses for supply chain and logistics in leading institutes.

• Our most important expectation from the new government is that it should provide an industry status to supply chain & logistics. A regulatory body should be created by the government to look into the concerns of our sector.

• If the above measures are taken by our new government on priority, then we can expect the Indian supply chain industry to achieve global standards in the near future.

While talking to these bigwies, Cargo Connect realised that each one of them has a certain kind of expectation from the new government and they are optimistic about the positive changes it would have on the logistics sector. Below are listed few of their common demands and hopes from the government that should be imple-mented urgently in order to revive growth and progress in the logistics industry.

Better infrastructure: Development of infrastructure is critical to economic growth with the country moving ahead on the backbone of the logistics industry that consists of road, rail, waterways and air network. The need to develop the ill-equipped, inefficient and improperly designed logistics infrastructure, to support the increase in freight traffic, was realised long ago, but despite that there is an urgent need to address this issue.

Since the country’s current logistics infrastructure is inadequate to meet its growth aspirations, the logistics industry has come up with suggestions regarding the fast improvement of the logistics industry:• Increase in road and rail connectivity;• Construction of motorable roads, as

India’s freight transport relies excessively on roads, and allocating funds for their maintenance;

• Focus on an integrated network design;

• Balanced modal approach by using rail and waterways for long distances, rail for medium distances and roads for short stretches;

• Constructing last-mile links and logistics parks to ensure interconnection between modes;

• Emphasis on better maintenance of the existing roads and rail tracks;

• Construction of new national expressways;• Emergency response systems on highways

• Removal of import duty on bunkers for coastal shipping;

• Harmonisation of taxes, procedures and policies across states to facilitate a seamless flow of goods and services. Recognition of logistics as a separate

industry: Despite the impact that the logistics industry has on the economy and its contribution to the GDP, this sector has

for accidents with trauma infrastructure at key locations;

• Developing a transportation network across all tier II and III towns;

• Development of dedicated railway freight corridors;

• Take up new projects to develop and provide modern facilities and equipment to the non-major ports;

• Establishment of airports for exclusive cargo handling;

• Improving the cold chain storage and transportation facilities for perishable goods;

• Proper infrastructure in ports to enable clearing goods in time leading to reduction in congestion;

• Promoti ng and developi ng coasta l transport for domestic goods movement will become an alternative to roadways;

• Emphasis to be laid on development of reefer-related infrastructure in view of India’s export thrust and potential;

• Developing some warehousing parks for establishing warehouses at subsidiary rates.

Change in the prevalent tax structure: The current indirect tax regime has negative effects on the economy to the extent that the Goods and Services Tax (GST) is being looked upon as a remedy to neutralise the existing problem of taxes being levied on top of taxes. To get rid of the various taxes levied on goods at various points of manufacture and sale, the logistics industry demands• Introduction and implementation of GST,

wherein both the central and state taxes may be collected at the point of sale;

• Streamlining the indirect tax structure;• Service tax abatement facility to be

extended to shippers even when they pay rail freight through shipping lines;

• Inclusion of export related activities in service tax negative list;

not been recognised as a separate industry. Recognition of this sector as a separate industry wil l not boost the sector but also speed up its progress. Also a separate regulatory authority for the logistics sector should be set up on the lines of the Insurance Regulatory & Development Authority or Telecom Regulatory Authority of India.

Concept of Air Freight Station to be turned into reality: The concept of AFS was suggested and put forth the government, but it is yet to be turned into reality. Apart from the activities traditionally performed at airports, the construction of AFS nominated as networked station by airlines will help to avoid congestion at the gateway airports.

Single window clearance: The single window facility will make services extremely cost effective in nature by providing all logistics activities as transportation, crating, loading, packaging, warehousing, customs procedure handling, trans-shipment cargo tracking, shipment, door del ivery and complete post-shipment activities in a single window. The logistics industry hopes that the government would improve the single-window clearance system and better its administration to cut down the processes.

High rate of technology adoption and i mplement at ion of com mu n ic at ion technologies like Electronic Data Interchange: Use of proper technology not only would do away with the filing of documents manually but the use of EDI would enable industry issues to bring in greater transparency, visibility and real-time tracking ability. The implementation of EDI would facilitate cost savings, ensure reliability and ease the monitoring process. The implementation of the EDI technology would also help in the significant reduction of cost and time and do away with human intervention.

The lack of emphasis on logistics leads to slow rate in the development process and the industry is looking forward to the new government to rid itself of the bottlenecks that has hampered its growth till date. Considering that Modi’s name is synonymous with development, it remains to be seen as to what extent the logistics industry would be able to get its expectations fulfilled and demands met.