India’s logistics sector still poor: ASSOCHAM

Sharath Chowdary

Industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) is worried about the growth of India’s logistics market as this sector drives the growth of several other sectors including manufacturing, FMCG, retail and e-commerce sectors.

The country’s logistics sector is still in a poor condition and because of this, the exporters from the country are not competitive when compared to other countries, D S Rawat, Secretary General of ASSOCHAM told The Dollar Business Bureau.

Robust logistics infrastructure, that include better road, rail, air and waterways, is very important for faster development of the country to support the government’s initiatives such as Make in India. Quality logistics infrastructure would help in attracting foreign investors to invest heavily in the country,” he said.

As per the World Economic Forum’s Global Competitiveness Report 2015–2016, India’s overall infrastructure ranked 81st out of 140 economies. India lags behind the BRICS countries (Russian Federation, Brazil, China and South Africa) in overall infrastructure. Hong Kong, Singapore and Netherlands are the top three countries in infrastructure ranking.

Stressing on the need to overcome the country’s infrastructure deficit, Rawat said, “The growth of Indian economy has placed stress on logistics infrastructure such as railways, roads, ports and airports. The goals of inclusive growth and a double digit growth in gross domestic product (GDP) can be achieved only if the country’s infrastructure deficit is overcome. Infrastructure development will help in creating a better investment climate in India.”

As per a study by ASSOCHAM, there are 1702 transport infrastructure projects that are under implementation stage. Among these, 438 projects have reported time overrun, and 674 projects have reported cost escalation. Over 23 projects have reported delay of more than 100 months. The cost of the projects has increased more than four times to reach Rs.4.8 lakh crore, from the actual cost of the projects at Rs.1.02 lakh crore.

According to the study, seven air transport infrastructure projects have been completed within the time frame but the rest of the projects got completed after lot of delays. Among 91 road transport projects, 16 projects have been completed on time. Only three out of 15 railway transport infrastructure projects, five out of 21 shipping transport projects and four out of 19 transport logistics projects have been completed on time while the rest have been completed but only after prolonged delays.