Improved logistics 'can help India save $5 bn'

India can save up to $5 billion or close to Rs 23,000 crore every year through improved logistics management across all categories.

A study by Council for Logistics Management says even one per cent reduction in overall logistics cost will result in annual savings of such huge amount.

India spends 13 per cent of GDP to logistics as compared to 12.5 per cent by South Korea and 17 per cent of China. However, China and Korea are much bigger economies than India.

"Given that India's GDP at 500 billion, one per cent reduction will be savings of $ 5 billion," P M U Menon, president of Asian Council of Logistics Management, said.

Speaking at 4th National Convention at Kolkata on Friday he said efficient supply chain management has become key to cost effectiveness. He observed Indian companies were still slow in managing its logistic costs.

"Among the companies surveyed, 40 per cent have logistic costs less than 10 per cent, 17 per cent have 10-20 per cent, five per cent have as much as 20-25 per cent," Menon said.

Transport infrastructure inadequacies eroded India's competitiveness. Indian shippers encounter serious constrains in high productivity costs, low productivity, complex procedure, delays at terminals and in transit and multiple points of interaction, he noted.

Ashok Mookherjee, managing director, Lasa India Pvt Ltd, said port infrastructure was critical to ensure a efficient SCM as well as export competitiveness.

"Lack of a good physical connection between ports and its hinterland is a major hurdle even though cargo handling capacity at Indian port are no longer an issue," he noted.

Containerisation of freight is of paramount importance, he said and it held good for rail as well. "Chinese Railways carried 1,305 billion tonnes over 58,000 kilometer. Chinese rail's performance is 4.6 times better than Indian Railways which carried 282 billion tonne kilometer over a route length of 63,000 kilometer," Mookherjee said.

Others who spoke on the occasion was Loretta Chow, managing director Tiffany Group, Brigadier M D Kamath, advisor and founder president of ACLM, and D P Patra, joint managing director of MCC PTA India Corporation, who delivered the inaugural address.