GST implementation will bring in welcome change for the logistics industry: Outsourcing Logistics in India - Challenges and Trends report by CII & KPMG
India’s ports should be geared-up to keep pace with rapidly growing economy and international trade. The Ministry of Shipping has finalised a National Maritime Development Programme (NMDP) to implement specific programmes for the development of the Port and the Shipping sector. Total investment envisaged for the programme is over Rs. 1 Lakh Crore, of which Rs. 55,804 is for the Port sector and the balance Rs. 44,535 is for the Shipping and inland waterways sector, announced Mr. G K Vasan, Minister of Shipping, Government of India.
He was speaking at Logistics Outsourcing Summit 2010: Unleashing potential of Indian Logistics Industry organised by the Confederation of Indian Industry (CII) – Institute of Logistics. Further announcing the ministry’s plans Mr. Vasan stated that a total of 276 projects have been identified in the port sector, of which 50 projects with a total investment of Rs. 5,717.28 Crore have already been completed. He in his address at the summit also called for the adoption of third party logistics to maximise efficiencies at all levels of supply chain.
The minister also released a Research Paper titled, Industrial Markets, Outsourcing Logistics in India - Challenges and Trends prepared by CII and KPMG. The report pays special attention to the proposed rollout of GST from April 2011, as a policy initiative bringing in a welcome change for the logistics industry. It outlines the major changes underway with warehouse consolidation and transportation route optimization, and the logistics service providers are preparing themselves for a change of uniform tax regime across the country. The report also makes concerted focus on third party logistics marketing India, which is expected to grow at CAGR of 22 percent from a small base of USD 200 million in 2008 to USD 700 million by 2015.
Delivering a brief on the research paper, Mr. R Narayanan, Partner, KPMG Advisory Services said that reducing logistics cost by 1% of GDP will lead to savings of USD 7.5 billion for the country. Third Party logistics / outsourcing can be instrumental in this regard. The reason, however, for low penetration of logistics varies from sector to sector and calls for greater sharing of sector specific information for a better understanding of logistics requirements.
The research report has identified six critical factors that can aid success to the logistics industry namely, strong relationship with the industry, providing industry specific value-added solutions, training and developing skilled manpower, having sufficient control over logistics assets, robust technology enabled systems and processes & Offering high service levels in order to make the customer realise the value third party brings to the table, added Mr. Narayanan.
Mr. R Dinesh, event Chairman & JMD, TVS Sons Ltd. stated that there is a need to understand sector specific requirement gaps and come up with innovative value additions to the concept of logistics. Moreover infrastructural bottlenecks, should be reduced and cost and services delivery mechanism should be re-evaluated.
Mr. Prem K Verma, Member, National Logistics Council & CEO, TML Distribution Company Limited said that third party logistics setups will be a brand differentiator in times to come. He also outlined that lack of skilled manpower is a key concern for the industry, and should be looked at with a lot of attention.