Logistics industry betting big on ‘Make in India’

June 29, 2015 12:17 pm

A need for an impetus to coastal and inland waterways movement is of paramount importance for seamless, cost-efficient movement of cargo.
Vivek Arya, MD, Rhenus Logistics India Pvt. Ltd.______________________________________________
 Rhenus Logistics India, the Indian arm of Germany-based Rhenus Logistics, is an ISO 9001:2008 certified company and is active in all modes of transport which is road, rail, air and ocean. The company provides customs brokerage, project logistics and warehousing services to its customers through dedicated as well as shared facilities. It is an integrated logistics service provider and provides all services in-house.
In an interview with Subhajit Roy, Vivek Arya, MD, Rhenus Logistics India Pvt. Ltd. highlights the opportunities and challenges of ‘Make in India’.
Optimism in the airSharing his perspective on the ‘Make in India’ initiative, Mr Arya says, “The campaign will lead to an increase in manufacturing in India which will create opportunities for the logistics sector. There will be a significant increase in the movement of capital goods, raw materials and finished goods.”
He feels that the ‘Make in India’ will also create a demand for domestic and international transportation, warehousing and distribution. “GST (goods and services tax) will also play a key role in the expansion of the logistics sector in India. 3PL in India is still in its nascent stage and holds phenomenal growth opportunities that can be unlocked. The entire logistics industry is optimistic about the ‘Make in India’ campaign,” added Mr Arya.
At the same time Mr Arya has also raised his concerns about the roadblocks within the government agencies. He says, “The top level in the government is talking the right language, but the ground reality currently is different. The allotment of land to various industrial zones is delayed. The process of getting permissions is a cumbersome process with multiple authorities to approach. There are many companies who want to start business in India, but are running from pillar to post to get permissions and land allotment.” He suggests that there needs to be a single window system, ideally like Singapore to encourage new businesses to set up in India.
According to Mr Arya currently the laws are very convoluted and vague. Single window system is expected to enable the companies to have clarity on various laws regarding licensing, obtaining clearances and other aspects.
India needs to get the required infrastructure and policy support to make a mark in the global market. The authorities need to focus on expediting the multi-lane highway projects, the freight corridors to be completed in time. “A need for an impetus to coastal and inland waterways movement is of paramount importance for seamless, cost-efficient movement of cargo,” observed Mr Arya.
If the government’s Sagar Mala project goes according to plan, India will witness to a holistic development of ports for the first time. This will lead to development of mega ports. It will also create focus on hinterland connectivity and setting up of industrial hubs which are connected to ports and have good logistics network.
Mr Arya has also raised his voice for the uniform taxation law across the country. He said, “India being one union country, there should be uniformity in taxation and freedom to move cargo inter and intra state. There should be no country within a country scenario. Tools should be rationalised to facilitate monthly or annual fees. In EU (European Union), it is easier to move goods within different countries than interstate due to uniform tax regimes.”
He adds, “Process for manufacturing both for home consumption and exports needs to be simplified.”
Bottlenecks withinThe industry needs better roads, lesser documentation for movement of goods between states and efficient airports and sea ports. A special focus on the infrastructure development in the country is need of the hour. The overall per unit cost of logistics needs to be bought down for viable production in India.
Logistics industry is set to play a major role and is capable of supporting growth which is anticipated with major investment being done in infrastructure. “The government policies and regulations such as the GST, regulations on cargo movement, and security initiatives will affect the supply chain,” said Mr Arya.
Labour reforms hold the key to the success of the ‘Make in India’ campaign. Mr Arya believes there should be measures to end ‘Inspector Raj’ with a system to sharply curb the element of discretion with labour inspectors and a single window compliance process for companies on labour-related issues. “Laws should be stringent and transparent, which doesn’t let the employee or the employer take undue advantage of either party,” he added.Labour migration has reduced since the introduction of NREGA. Though the steps taken in this Programme are essential from the social security point of view, labour migration should be encouraged for the betterment of the industry.
“Reforms towards operation of truck and tempo unions at select locations should be introduced,” suggested Mr Arya.
The game changerRhenus Logistics India is in the service industry in the logistics and supply chain vertical. Sharing his views on the steps to be taken by the govt to promote domestic manufacturing in logistics and supply chain vertical, Mr Arya said, “The game changer for this industry would be the introduction of GST. With the GST roll out over all cost of supply chain should reduce by 3 to 4 percentage points.”
Redesigning supply chain Rhenus Logistics India’s services cover the entire process chain – from procurement of raw materials to distribution of finished products. The company also provides in-plant services by helping customers outsource some of their internal processes. The company has an in-house solution design and implementation team.
“We are in the process of redesigning our supply chain to drive efficiencies after the GST is in place and conform to any legislation that focuses on cargo export-import laws and security norms,” said Mr Arya.