When the logistics industry has a stomach upset, the Indian foreign trade community gets discomforting bowel movements – a troubling reality that the Indian foreign trade community is living today

Steven Philip Warner | The Dollar Business

No single episode can capture what’s ailing the ‘road-rail-water’ triad in the world’s largest democracy. For years now, our ear drums have become accustomed to anxious voices swearing how tonnes of food grains lie ignored in the government’s storehouses for lack of an appropriate “delivery mechanism”. From a foreign trade stakeholder perspective, the picture is a shade dismal. There is another bottleneck – that of costs and delays associated with documentation and clearance. It balloons the preexisting challenge that comes in the name of logistics. It makes the word “logistics” read like heavy “log-sticks” to an exporter or importer in our country – one foreseen yet unavoidable physical blow ready to hit him on the forehead!

Plainly stated – of all things that matter to the nation’s export-import trading community, logistics is the crash test that fails them. Arguably, each time.

The costs are clear. Besides the melodrama of potholed roads, congested ports, and malfunctioning cold storages, the export-import community has to bear ‘unbearable’ costs and delays associated with documentation and clearances at various levels, technical control, haggling middlemen, and terminal handling. There are far-reaching impairments that such an induced incompetence can cause. One of which is loss of credibility of our foreign trade community. Simple – when the logistics industry has a stomach upset, the Indian foreign trade community gets discomforting bowel movements.

As per the World Bank, the cost of importing merchandise on each 20-foot container into India from the US market is $1,462. In Singapore, this would cost 70% less, in Vietnam – 59% less, Sri Lanka – 53% less, China – 46% less...this ‘less’ list is long! (Shame! Even war-torn and impoverished Bosnia & Herzegovina has better numbers than India’s!) There are 100 countries where goods are being imported (from US) at costs lower than the levels at which India is! In terms of documents required for imports, India is behind 161 other nations (in ascending order of the count of documents required). Unpardonable.

For exporters, the reality is equally (if not more) disquieting. The cost of exporting a container to US (India’s #1 export market) from India is $1,332. Compare that to other exporting markets and you realise that India is actually sitting at the bottom of the pile – below 108 nations! Worse, in 111 other nations, exporters require lesser count of documents!

Aren’t these straightforward testimonies of how Indian exporters and importers are playing a match with the scoreline reading against them even before the coin is flipped?

Procedural delays have to end. Interference by private or government agencies (in the name of quarantine, quality, safety…whatever checks) have to be made strictly time-bound. Solving the pothole question or even getting mechanized berths along our coastline isn’t the panacea. More needs to be done. And fast.

Policymakers can begin by conferring “industry” status to whatever is going on in the name of a $107 billion Indian logistics business (so hard not to call it an industry!). Especially with the implementation of the Goods and Services Tax regime being talked about, the logistics players do need benefits of cheap credit, availability of land, government attention, etc., urgently. Second, with bulky-and-time-consuming paperwork-rich processes being chiseled out, adequate infrastructure has to be made available or facilitated at the ports. [JNPT Port (Mumbai) that handles 50% of the country’s sea cargo has an average turnaround time of 36 hours – 200% more than those of ports at Shanghai, Dubai and even Colombo!] Third and most critically, beyond tyres, propellers, deeper drafts at ports, and even runways – the country’s foreign trade community needs a “fleet-footed” action and reaction mechanism to be implemented, with every concerned official and authority in the government being made accountable for timeliness and precision in the realm of logistics.

Presently, there is a lot left to be desired as far as the global community’s perception of our nation’s logistics industry is concerned. In a study conducted by Turku School of Economics and World Bank, India is ranked below 64 other nations on the basis of Logistics Performance Index. [Even Malta, an archipelago of seven islands, is better placed! Do you even know where it sits on the world map?]

As they say, “Charity begins at home”. How about one case of efficient logistics beginning at home: can we have the new foreign trade policy hitting the road before the 2015 Union Budget does? [This consignment has already scored a negative on the on-time delivery parameter!]