Quick to grow, slow to change

February 11, 2013 10:07 am

Growth is throwing up some new, unusual challenges for logistics in India as well as highlighting familiar problems. New challenges include a sharp increase in sales going to rural areas, and OEMs making commitments to many after-sales service points. The continuing problems include poor infrastructure, weak central government, local corruption and inadequate multimodal logistics.
Amid recent uncertainty about economic growth there remains confidence that, despite not being able to accurately forecast it, India is still on its way to 5 million annual car sales within a handful of years. That compares with an expected 2.6 million for 2012, and will move the country up to being the world’s third-biggest car market, after China and the US.
Overall, India is “nearing an inflection point” at which its economic growth will increase rapidly, says consultancy Roland Berger. Having started its economic liberalisation about 15 years after China, the next 15 years will see “dramatic” reductions in poverty and put India on course to be the world’s third largest economy in terms of purchasing power by 2020.
These were the key takeaways from the 6th-annual Automotive Logistics India conference, held in Pune. The event was characterised by a new level of openness and debate among the 300 delegates, and a genuine wish to move on from recitals of familiar problems to engaging together to solve them.
Some of the changes include the fact that the country’s biggest carmaker, Maruti Suzuki, is currently selling 25 per cent of its volume into rural areas, five times more than 5 years ago, with the attendant impact on finished vehicle logistics, spare parts and after-sales. And the country’s biggest commercial vehicle manufacturers, Tata and Ashok Leyland, are committed to having many more service points; Ashok Leyland of some 20,000, while Tata is committed to a service point every 25 km, according to consultancy Roland Berger.
Meanwhile, there is a new mood of collaboration among OEMs. Prem Verma, Chief Executive Officer, TML Distribution, Tata Motors and Amlan Bose, Vice President of logistics for Asia Pacific and Africa, Ford, revealed they were in close dialogue on working together at their neighbouring factories in Sanand in Gujarat.
The conference again featured participation from a high level of national government, with a keynote address by Vinita Kumar, senior advisor for transport at the Planning Commission. Only one year into her job, she admitted to needing ‘some level of courage’ to face the expert audience, but told delegates that the government “is very keen to make changes”.
Kumar said that transport-related issues are a focus of the India’s 12th Five-Year Plan, which is a year underway. She noted its intention of raising the share of GDP invested in transport from 7 to 10 per cent which she characterised as a “five lakh crore programme”.
The conference this year also featured several new voices and themes, and heard that private investment in railway is back on the agenda.