“Coastal shipping is still an under-exploited opportunity”
Dr G. Raghuram, Director, IIM Bangalore, in this interaction with Trade Promotion Council of India, discusses how India’s logistics sector can serve as a stepping stone for the country’s economic success by bolstering its trade with other countries.
TPCI: In the recent ease of doing business report, India jumped 14 places from 77th in 2018 to 63rd this year. It is also among the top 10 performers out of the 190 countries surveyed. What is your take on this, especially in context of the logistics sector?
Dr. G. Raghuram: It is notable that India has moved up consistently in the ‘Ease of Doing Business’ rankings. One of the important parameters, related to logistics, is ‘trading across borders’, where we have been improving. We have also shown improvement in related parameters like electricity and construction. However, there is a concern on how these parameters are measured. For example, for ‘trading across borders’, logistics along specific routes are assessed. It is always possible that our performance is better on the measured sample rather than across the board. Similarly, for the assessment of electricity, it is possible that there is an understated demand, often due to pricing distortions. It is a reality that power cuts are still prevalent in many parts of the country. The construction sector is also not all above board, while the professionalism is definitely on the rise. Overall, my take is that while there have been improvements, we have a long way to go, especially in the logistics sector.
TPCI: What are the significant infrastructural/logistical challenges that prevent India from being in the top 50 countries of this survey? How can India enhance its performance further?
Dr. G. Raghuram: Our transport infrastructure is still below par in terms of capacity and reliability on important routes in the country. Both rail and road infrastructure need further enhancement. In the rail sector, the Dedicated Freight Corridors, which should become operational by 2021, would make a difference. However, multi-modal coordination could still be a challenge. Systems to be customer responsive, especially in the rail sector, need to evolve more. In the road sector, safety needs to be addressed. Coastal shipping is still an under-exploited opportunity, where again multi-modal coordination needs to come in.
TPCI: What is your opinion on a National Logistics Policy? What considerations should be kept in mind while drafting this?
Dr. G. Raghuram: While it is good to have a National Logistics Policy, the bigger concern is one of execution. Firstly, it is good that a Logistics Division has been set up, under the Ministry of Commerce, with the intent of coordinating across the different Modal Ministries. However, the balance of power in driving execution, across the Ministries, needs to evolve. The legitimacy of a Logistics Policy could help in this. The key considerations one should keep in mind are ease of mobility (speedy and streamlined flow from origin to destination), energy intensity, and cost.
TPCI: What can be done to incorporate digital technology in the logistics sector?
Dr. G. Raghuram: Providing supply chain visibility of goods and vehicles is important for better coordination. This is best done through digital technology, including global positioning systems and sensor systems. Often, technology is not as much the bottleneck as the attitudes and analytics to use it. This can be addressed through better exposure, skill development and education at various functionary levels.
TPCI: What lessons can India learn from some of its international counterparts to enhance the contribution of logistics in India’s GDP?
Dr. G. Raghuram: The countries that do well in logistics are firstly because infrastructure is more a facilitator than a constraint. Secondly, there is a basic value of customer orientation, wherein the need to provide information and adhere to timeliness of delivery, is given a high emphasis. With these perspectives and consequent execution, the logistics contribution to GDP can be enhanced.
Dr. G. Raghuram took charge as the Director of IIM Bangalore in February 2017. Prior to that, he was Professor and Chairperson of the Public Systems Group at IIMA. He has been Dean (Faculty), IIMA, Vice-Chancellor of the Indian Maritime University and Indian Railways Chair Professor.