1299583006ramsingh.ppt

Logistical Bottlenecks in India: Government Interventions &

Policy Initiatives

Dr. Ram Singh Assistant Professor

International Trade Operations & Logistics Indian Institute of Foreign Trade

New Delhi Email: [email protected]

Interactions with Stakeholders on Fresh Produce India conclave at Hotel Sangri La; New Delhi as on 3rd March; 2011

Wastages in Fresh Produce In India

o According to IPA; absolute loss from wastage of fresh produce in India is around 13-14 billion $ in 2009-10. India is the second largest producer of Fresh Produce in world and Fresh Produce is growing around 5-8%; far faster then the combined agriculture growth of country.

….Mainly because of increased pressure on gateways.

Country / Region

Logistics Costs as % of GDP

Share of Organized Logistics

Size of the Logistics Industry ( $ Billion)

Share of Logistics Industry in global Industry

India 12-14% 3-4% 145-160 2-3 % China 18% Less Than 10% 800-950 NA USA 9.9% 34% 1200-1400 NA Europe 7.1% 54% 1100-1300 NA

Growth Of Logistics Industry In India CAGR (2006‒2010)

India’s Total Logistics Market 10 ‒ 12 % Organized Logistics Outsourcing Market 25% Unorganized Logistics Market 9 ‒ 11 % 3 PL 35 %

Constituents of Total Logistics Cost India Transportation 35% Warehouse & Handling 9% Inventory 25% Packaging 11% Customers & Shopping 6% Transit Losses

Technology cost

14%

<1%

Substantial opportunity to save on Transportation and in-transit losses with the adoption of suitable Technology.

Logistical Bottlenecks in India

Trading Across Borders

Indicator China India Brazil South Africa Indonesia Pakistan Srilanka

Trading Across Borders 50 100 114 149 47 81 72

Documents to export (no.) 7 8 8 8 5 9 8

Time to export (days) 21 17 13 30 20 21 21

Cost to export (US$ per container) 500 1,055 1790 1531 704 611 715

Documents to import (no.) 5 9 7 9 6 8 6

Time to import (days) 24 20 17 35 27 18 19

Cost to import (US$ per container) 545 1,025 1730 1807 660 680 745

India’s Logistics Performance Index

Source: Author Constructions based on LPI 2010

Government Interventions & Policy Initiatives in Logistics Infrastructure in India

Policy Initiatives for Road Sector

Sector Deficit Eleventh plan Targets

FDI Envisaged Investment Size

Road / Highways

Roads / highways 65,590 km of existing national highways:  Comprise only 2% of network  Carry 40% of traffic  Of which 12% is 4-laned; 50% is 2-laned; and 38% is single laned

 6-lane 6,500 km in GQ  4-lane 6,736 km NS-EW  4-lane 20,000 km  2-lane 20,000 km  1,000 km expressway

100 % FDI under automatic route

US$ 78.5bn

Policy Initiatives for Port Sector

Sector Deficit Eleventh plan Targets

FDI Envisaged Investment Size

Ports Inadequacy of   Berths   Rail / road connectivity

New capacity:   485 million MT in major ports   345 million MT in minor ports

100 % FDI under automatic route

US$ 22 bn

Policy Initiatives for Air Port Sector

Sector Deficit Eleventh plan Targets

FDI Envisaged Investment Size

Airports Inadequacy of   Runways   Aircraft handling capacity   Parking space and terminal buildings

  Modernize 4 metro and 35 non-metro airports   3Greenfield in North Eastern Region (NER)   7 other Greenfield airports

  100% FDI for existing airports (FIPB approval for FDI beyond 74%)   100% FDI under automatic route for Greenfield airports   49% FDI is permissible in domestic airlines under the automatic route, but not by foreign airline companies

US$ 7.74 bn

Policy Initiatives for Railways

Sector Deficit Eleventh plan Targets

FDI Envisaged Investment Size

Railways   Old technology   Saturated routes   Slow speeds (freight: avg 22kmph; passengers: avg 50kmph)   Low payload to tare ratio (2.5)

  8132 km new rail   7148 km gauge conversion   Modernize 22 stations   Dedicated freight corridors

100% FDI permitted in railway infrastructure under automatic routes

US$ 65.45 bn

Policy Initiatives for Warehousing Sector

Entitlement of Units Facilities available in a FTWZ NFE criteria

a.  Income Tax exemption as per 80 IA of the Income Tax Act.

b.  Exemption from Service Tax.

c.  Free foreign exchange currency transactions would be permitted.

d.  Other benefits mutatis mutandi as applicable to units in SEZs.

a.  Customized categorized warehouses e.g. Chemicals, food, electronics, oil, etc.

b.  Sophisticated freezer / cooler facilities

c.  Break bulk, containerized, and dry cargo storage facilities

d.  Controlled humidity warehouses

e.  Enhanced transportation facilities

f.  World-class information system for cargo tracking etc.

g.  Office space Support facilities and amenities like medical facility, canteen services, and business centers.

Units in FTWZs shall be net foreign exchange earners. Net foreign exchange earning shall be calculated cumulatively for every block of five years from the commencement of warehousing and/or trading operations as per formula. Applicable for SEZ units.

Strengthening Vital Elements of Agri-Logistics

o  Agri Export Zones

o  Contract Farming

o  Food Park Scheme

o  Supply – Cold Chain

o  Modern Auction Centres

o  Agri Marketing Reforms – Irradiation facilities and value added centers

Government Initiatives: Success Story of

Fresh Produce (Ginger)   Organic ginger of Karbi Anglong; North East

India   Formation of Gin-Fed with objectives of:

  To bring all ginger growers of the district under one umbrella;

  To avoid distress sale of ginger;   To link the growers directly to the market ( Rail

Wagon to Delhi/ Kolkata) in order to enhance their profitability;

  To ensure more income by value addition (cleaning, grading, waxing, dehydration and packaging)

  To find out various avenues for marketing ginger;   To uplift the economic condition of ginger growers by

linking credit facilities (bank loan) as seed capital through banks by means of the G-Card; and

  To introduce the participation of national and international markets.

I DID NOT PUT ENOUGH OIL IN MY FLICKERING LAMPS, WHY BLAME THE

WIND?

Thank You