Union Budget 2022-23: When it comes to ease of doing business, India is still far from where it needs to be
Indian Union Budget 2022: Upgrading India’s logistical facilities is key for the country’s economy. Image courtesy Kgbo/Wikimedia Commons
Supply chains are the backbone of any country’s economy. In 2020, the pandemic disrupted supply chains as the demand for logistics support dropped in the wake of the lockdown. In 2021, there were different challenges, but the overcall recovery has been quite encouraging. In fact, in many areas, the demand has risen so sharply that it caused bottlenecks due to a supply gap.
A lot of push is being given to make India a $5 trillion economy by 2024-2025. As manufacturing, e-commerce and D2C retail segments grow, this goal has become increasingly achievable. However, we need to take the right steps towards building technology-driven warehousing and transportation facilities to make it happen. Therefore, as the government readies Budget 2022, there is a need to make our supply chains resilient and dynamic by focusing on the following points.
Reducing the cost of logistics
The Indian logistics sector is highly fragmented, and at nearly 14 percent, the logistics costs in India are among the highest in the world. If we have to compete at an international level, this cost needs to be brought down to a single digit. Comparatively, in the US, logistics costs less than 8 percent of the GDP. The much-awaited National Logistics Policy that the finance minister had hinted at in the previous budget speeches needs to be implemented to achieve this goal.
Simplification of norms
When it comes to ease of doing business, India is still far from where it needs to be. The country needs to do away with archaic laws and provisions to enable faster and smoother business incorporation and operations. For instance, factory licenses are still applicable to set up warehouses. The process for setting up new warehouses is long-winding and subject to numerous regulatory compliances with different departments. This approach should be replaced by a single-window clearance system especially for setting up last-mile hubs and dark stores.
Establishment of mini-logistics hubs, dark stores
There is a need to build more fulfilment centres at the periphery of major cities. Demarcating mini-warehousing zones around major cities can significantly boost economic growth. Moreover, the government needs to encourage logistics hubs that would facilitate on-demand & pay-per-use warehousing. Such facilities can democratise e-commerce growth for startups and SMEs. Companies that endeavour to build such logistics hubs in non-metro cities should be supported with funding and faster approvals. Land acquisition is a major challenge, and simplification of the acquisition process and digitization of land records will be the key to setting up world-class warehouses.
Building skilled logistics workforce
The future of the logistics industry lies in technology-driven processes that optimise, automate and streamline logistics processes and connectivity. The rapid deployment of cutting-edge tech in the arena necessitates the skill development of the logistics workforce. The government must take steps towards creating skill development opportunities for the logistics workforce in the budget.
Support for supply chain innovation
The incredible IT talent and technological know-how that our nation possesses has seen the emergence of some cutting-edge supply chain startups. They are developing innovative and integrated logistics services that can take care of end-to-end supply chain needs. Such futuristic companies should be given a favourable status in the government’s supply chain digitization projects. The Central Warehousing Corporation (CWC) plays a crucial role in agricultural and other supply chains across India. By digitizing its warehouses by leveraging technology innovations of such logistics startups, it can bring about national-level reforms.
Investment in specialized warehousing catering for futuristic needs
A significant investment is required in building cold-storage facilities across the country as the current facilities are inadequate to meet the rising demand. The government must focus on building or streamlining financing of such facilities as it will also ease access to food, medicines, vaccines and other pharma products in the years to come.
Adoption of EV and other measures
Apart from these measures, there are several other interventions such as simplifying international trade and supporting EV deployment in the logistics sector that need urgent attention.
We have an opportunity to build a robust and sustainable growth roadmap for the Indian economy. There is hope that the journey will start with the right focus in the Union Budget 2022-2023.
The writer is Founder & CEO, Prozo- e-commerce enabler, and accelerator for SMEs, D2C brands, and Enterprises.
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