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: ramsingh@iift.ac.in
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.
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
Organized Logistics Outsourcing Market
Unorganized Logistics Market
3 PL
10 ‒ 12 %
25%
9 ‒ 11 %
35 %
.Mainly because of increased pressure on gateways.
Constituents of Total Logistics Cost
India
Transportation
35%
Warehouse & Handling
9%
Inventory
25%
Packaging
11%
Customers & Shopping
6%
Transit Losses
14%
Technology cost
<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$
500
per container)
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
1807
660
680
745
Cost to import (US
545
$ per container)
1,025 1730
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
Road /
Roads / highways
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 2laned; and 38% is
single laned
Eleventh plan
Targets
FDI
Envisaged
Investment Size
 6-lane
100 % FDI
under automatic
route
US$ 78.5bn
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
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
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

Envisaged
Investment
Size
100% FDI for existing US$ 7.74 bn
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
Policy Initiatives for
Railways
Sector
Deficit
Railways

Old
Eleventh plan
Targets
FDI
  8132
100%
US$ 65.45 bn
FDI
permitte
d
in
railway
infrastru
cture
under
automati
c routes
km new rail
technology
  7148 km gauge

Saturated conversion
routes

Modernize 22
  Slow speeds stations
(freight:
avg   Dedicated freight
22kmph;
corridors
passengers: avg
50kmph)
  Low payload
to tare ratio
(2.5)
Envisaged Investment
Size
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 Units in FTWZs shall
warehouses e.g. Chemicals,
be
net
foreign
food, electronics, oil, etc.
exchange earners.
b.  Sophisticated freezer / cooler
Net
foreign
facilities
exchange earning
c.  Break bulk, containerized, and
shall be calculated
dry cargo storage facilities
cumulatively
for
d.  Controlled
humidity
every block of five
warehouses
years from the
e.  Enhanced
transportation
commencement of
facilities
warehousing and/
f.  World-class
information
or
trading
system for cargo tracking etc.
operations as per
g.  Office space
formula. Applicable
Support facilities and amenities like
for SEZ units.
medical facility, canteen services,
and business centers.
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