1. Scenario Study
With the recent successful launch of Agni-5 missile with its range more than 5000 Km, India
has joined the select club of nations like U.S. , China, France and Russia ,however to be entitled
to be called a super power, India has to catch up with these developed nations on many fronts .
One such desired area is definitely manufacturing because China in order to become a real super
power improved itself drastically in area of manufacturing so much so that with its sustained
efforts, it became a global manufacturing hub.
Manufacturing in India is still a mere 16 percent of the country’s GDP while it is 34 per cent
for China and 40 per cent for Thailand. Eleventh five year plan targeted growth in manufacturing
at 10 to 11 percent but actual performance remained only about 7.7 percent. Government of India
(GOI) has as such rightly put lot of emphasis on manufacturing in its 12th five year plan (year
2012-2017) by targeting a growth of 12 to 14 per cent. As per the 12th national manufacturing
plan, the 2.0 to 4.0 per cent differential over the medium term growth rate of the overall
economy will enable manufacturing to contribute at least 25.0 per cent of GDP by year 2025.
This shall help to provide a large portion of additional employment opportunities to India’s
increasing number of youth. While the services sector has been growing fast, it alone cannot
absorb the 250 million additional income-seekers that are expected to join the workforce in the
next 15 years. Unless manufacturing becomes an engine of growth, providing at least 100 million
additional decent jobs, urban, rural gap will further widen and it will be difficult for India’s
growth to be inclusive. Further India’s balance of trade cannot be balanced any longer just by
increasing raw material exports and importing finished goods and the export basket must include
much larger volume of manufactured goods.
However to reach this ambitious target, a lot needs to be done in the direction of improving
country’s infrastructure to produce quality products and be competitive globally. What is
required as such by manufacturing companies is working on optimum cost and improvement in
quality, efficiency and speed to response to customer’s needs in the global market place. In all
these directions both inbound logistics and outbound logistics as shown in figure 1 below face
unprecedented challenges and can make major contributions if tackled in a planned manner.
National manufacturing plan has identified following sectors as priority sectors for the 12th five
year plan.
1. Sectors that will create large employment
• Textiles and Garments, Leather and Footwear, Gems and Jewellery, Food Processing Industries
& Handlooms and Handicrafts
2. Sectors that will deepen technology capabilities in Manufacturing
• Machine tools, IT Hardware and Electronics
3. Sectors that will provide Strategic Security
• Telecommunication equipment, Aerospace, Shipping & Defense Equipment

2. 4. Manufacturing-Technology sectors for Energy Security
• Solar Energy, Clean Coal Technologies, & Nuclear power generation
5. Capital equipment for India’s Infrastructure Growth
• Heavy electrical equipment, Heavy transport, earth moving and mining equipment
6. Sectors where India has competitive advantage
• Automotive Sector, Pharmaceuticals and Medical Equipment
7. MSME sector
Among the above sectors, Automotive sector, heavy electrical equipment, pharmaceutical and
medical equipment, machine tools, telecommunication, Aerospace, shipping and defense
equipment etc have quite a complex manufacturing and as such objectives like cost minimization
to remain competitive, attainment of speed, efficiency, quality and responsiveness to customers
are more challenging and equally is the contribution of inbound and outbound logistics
extremely critical. While government of India is taking suitable steps in various directions like
creating trained manpower, encouraging Industry Academia interfacing and improving logistics
infrastructure in the direction of Road,, shipping and Aviation with emphasis on public and
private partnership, we shall look more closely into the challenges which are offered to
manufacturing and Logistics industry and to new and existing Logistics players. I must point out
here that the challenges are also new opportunities to the new and existing players and if they are
able to embrace the challenges successfully, they have a big opportunity to reap the benefits as
early birds giving them sustenance to become long term players. What one needs to remember is
that in such an environment, manufacturing companies, logistics players, suppliers, dealers and
Retailers have to strive through teamwork to a perfect supply chain order that is getting the
right product to the right customer at the right time, in the right condition and at the right cost.
For manufacturing companies to succeed, handling inbound logistics by manufacturing
companies is of paramount importance and quite critical. While there are enough outbound
logistics players in the country handling transportation and warehousing of finished goods, there
are only few inbound logistics players helping manufacturing companies and can be counted on
fingers.
Globally such strong relationships have helped Companies like Toyota, Ford, Chrysler and many
more with their 3 PL partners like DHL, Ryder , Schneider Logistics , GEFCO and VASCOR
ltd etc evolve cost optimizations in their inbound and outbound logistics increasing their profits
and customers/dealers’ delight .
Here one should keep in mind that technology can play a very crucial role in ensuring success
and as such inbound and Outbound Logistics players who understand the importance of
technology such as implementation of ERP, Information technology, RFID , automation etc and
are ready to make investments in these areas stand a greater chance of success.