It's time for action

TRADEZONE/ INDUSTRY VIEW

Or else, India will be defeated in the logistics race.

In April 2005, the Deputy Foreign Minister of Thailand, while speaking at a function at Beijing, clearly articulated the plan of the Thai Government to open four more consulates in China to take advantage of the proposed China-ASEAN free trade agreement (FTA) to be implemented in a full-fledged manner by 2010. The intent was extremely clear. The Thai Minister wanted to exploit the strategic geographical location of Thailand as a bridge between ASEAN nations and China.

This vision in the official Thai strategy has been a result of sustained and strategic efforts made by the Thai logistics industry. They kept on pursuing the Thai officials with a detailed plan before their Hon. Minister actually articulated this intent in an official function during 2005. Unfortunately, this perspective is absent within the logistics industry in India. There is hardly any concerted effort made by the domestic logistics industry to transform India into a logistics hub linking ASEAN with West Asia and the EU.

Everybody keeps on saying that logistics is big business in India and is more than a billion dollar opportunity. But there is hardly any chamber that is willing to provide this unfolding opportunity an open-economy framework. Although a number of chambers keep on mentioning and complaining about the logistics-deficit within India at a peripheral level, there are few who are even ready to invest in the creation of a cogent strategy towards transforming India into a logistics hub linking ASEAN with the EU.

The need of such investment by creating a platform across chambers of commerce is becoming extremely urgent. Creation of a logistics hub that facilitates trade between ASEAN and EU will imply creating soft and hard infrastructure to facilitate more than $3 trillion of trade. Direct and indirect employment for at least half a million people can easily be generated in the various arms of the logistics sector to service this trade. In fact, logistics is probably one of the few services sectors that has the potential of making services sector growth in the country more inclusive.

As a part of strategy, chambers must first generate interest within State Governments and Municipal corporations before approaching the Centre. We must realise that if the State does not invest in creation of infrastructure linking airports, national highways and in education, any larger Centre-driven game plan will never fructify. An effort in this direction was made in the State of Andhra Pradesh about a half a decade ago. Unfortunately nobody seems to have followed up on this effort after that.

In order to encourage State governments and corporations to participate in such exercises, logistics associations can tie up with rating agencies to institute a logistics award for the State government that excels in creation of logistics infrastructure. It is beyond doubt that logistics associations in this country will have to be innovative and parallely have to come under a banner in order to help India realise such an ambitious vision.

It is time for action, isn't it?

The author is chief economist at Economic Laws Practice, Advocates & Solicitors