Logistics Industry - Present Scenario & Expectations

1. 1
Logistics Industry: Present Scenario & Expectations
By
Zubin Poonawalla
FY15 was a landmark one for the Indian Transport & Logistics sector with the
industry gaining prominence due to the dawning recognition of its role in the
world of e-commerce retail segment & optimism around the imminent GST
rollout. Logistics emerged as a topic of discussion across boardrooms &
drawing rooms, with this spotlight enabling the wider communities to
appreciate the challenges faced by the operators & stakeholders associated
with the sector. The enhanced visibility & understanding of the sector among
a wide range of communities is expected to significantly catalyze support &
innovation to drive the evolution of the Indian logistics sector in the coming
years.
The past year witnessed the announcement of several transformational
projects by GOI, eg, Union Minister for Road Transport & Ports, unveiling the
investment plans worth INR 10 trillion in various projects & initiatives upto
FY19, which is expected to amplify the scope of this sector.
Roads
The Govt announced an investment of INR 40,000 crore for roads in FY15-16
Union Budget, including plans for the completion of on one lakh kilometer of
roads currently under construction, plus approving & building another one lakh
kilometer of road to connect all unconnected habitations. The government
plans to develop a total of 66,117 km road ie, constructing 30 km a day from
FY16 under the NHDP, SARDP- NE & LWE schemes.
Maritime
The maritime industry gained prominence in FY15 with various initiatives
taken up for the development of the segment. The government plans to
develop 10 coastal economic regions as part of the Sagarmala project & is
further taking measures to develop inland waterways as a mode of water
transport. The government has estimated an investment of INR 35,000 crore
over the next two years on the 101 additional inland waterways to be
developed as National Waterways for navigation. Inland Waterways
transportation offer game-changing opportunities in the Indian context,
especially to meet the demand for bulk transportation to nearby areas, along
the coast vis-à-vis other modes of transport. Additionally, the government has
taken measures to improve operational efficiency through mechanisation,
deepening the draft & speedy evacuations.
Railways
Various initiatives have been proposed including increasing annual freight
carrying capacity, developing 400 new railway stations & introduction of a
centrally managed Railway Display Network in over 2,000 stations by FY17.
Further, revamping the existing network by introducing high-speed trains &

2. 2
increasing the existing speed of railway corridors are on the anvil. The
government is also looking at developing heavy-duty, high-speed, extra-wide
& doubly stacked dedicated freight corridors.
Aviation
The growing emphasis on international trade & regional connectivity,
advanced IT interventions, relaxation in FDI regulations & increase in e-
commerce is driving the growth of the Indian aviation sector. India aims at
becoming the 3rd largest aviation market by FY20 & the largest by FY30. The
government has projected a requirement of about 500 brownfield & greenfield
airports by FY20. Further, the government is increasing the participation of the
private sector in the construction of airports via various PPP models, where
the states support by financing, offering concessional land allotment & other
incentives.
As India prepares to evolve to the next level of the logistics growth trajectory,
the regulatory policies & infrastructure investments could be enhanced to
keep pace with the changing dynamics of the economy. While it is imperative
for the policymakers to accelerate implementation, other stake holders,
including service providers, users & industry bodies, would be required to
work in collaboration to prepare a road map in advance to provide the
required impetus to the sector.
Looking at FY16 & beyond, the proposed GST regime, & the boom in e-
commerce are expected to alter the landscape in warehousing, supply chain
management & 3PL business. While the outlook for the global logistics market
for FY16 appears to be challenging, the Indian market presents a relatively
optimistic picture for the year ahead.