Status of India’s Supply Chain and Logistics

RIGA TECHNICAL UNIVERSITY

Faculty of Computer Science and Information Technology

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REPORT

ESSAY ON LSCM ACTIVITIES IN INDIA

Study course: “LSCM European Dimension”

Student name:   Nida Anjum

                                                                          Student ID       : 151ADM051

Table of Contents

1. Introduction 1

2. Development of LSCM areas in India3

1. Overview of research papers on LSCM in India3
2. Overview of professional LSCM organizations in India4

3. DTDC national/ international logistics company11

4. Conclusions 12

5. List of references 14

1. Introduction

STATUS OF INDIA’S SUPPLY CHAIN AND LOGISTICS

Indian companies are moving towards making their supply chain and logistics efficient, most of them have done very little or nothing. If companies choose to compete in the global environment, they will have to look for ways to reduce expenditures of their suppliers and channel partners, logistics or distribution partners. This reduction in cost will leads the revamping of supply chains and significant investment in information technology, because information technology tools and techniques plays very important role in improving the status of the SCM. Due to the country's weak distribution network, many retailers maintain higher inventories than would otherwise be required. In logistics, a highly fragmented trucking industry makes it difficult for companies to manage the excessive of carriers required to handle shipment volumes.  Although outsourcing of logistic activities to third-party logistics providers is increasing, there are very few organized providers in India. 

Lack of technology adoption also remains a challenge for India's supply chain.  While the sale of supply chain management software is starting to grow at a rapid rate, it is doing so from a very small installed base. Supply chain costs in India represent as much as 13 percent of the GDP. This is almost double the percentage in developed countries: in the U.S., supply chain costs amount to 8.5 percent of GDP. Though India has the second-largest road network in the world, totaling 4.2 million kilometers, most of it is of poor quality. Indian SCM service providers are evolving rapidly. The shift in service providers from just movers of material to logistics to supply chain services has quickened in the past few years. Truckers are moving up into integrated haulers; large Indian companies with multi-million spends on logistics are hiving off entire divisions into service providers who handle not just the parent’s logistics but also of others; others are forming joint ventures to leverage skills. IT companies now provide not just the hardware and software, but consultancy for solutions, examples being Satyam, Wipro, Infosys and TCS. Big players like DHL have invested US $ 250 million in India and more is on the way. It has already acquired Blue Dart, the top firm in air logistics business.

Sea logistics: According to the Ministry of Shipping, around 95 per cent of India's trading by volume and 70 per cent by value is done through maritime transport. India has 12 major and 187 non-major ports. Cargo traffic, which recorded 1,052 million metric tonnes (MMT) in 2015, is expected to reach 1,758 MMT by 2017. The Indian ports and shipping industry plays a vital role in sustaining growth in the country’s trade and commerce. India is the sixteenth largest maritime country in the world, with a coastline of about 7,517 km. The Indian Government plays an important role in supporting the ports sector. It has allowed Foreign Direct Investment (FDI) of up to 100 per cent under the automatic route for port and harbour construction and maintenance projects. It has also facilitated a 10-year tax holiday to enterprises that develop, maintain and operate ports, inland waterways and inland ports.

Air logistics: Air statistics department carried out forecasting exercise using econometric models to estimate the most likely growth scenarios of air freight traffic in India for the next 20 years. While domestic GDP is the explanatory variable for forecasting domestic Cargo growth, world GDP is the explanatory variable used to forecast international freight traffic to and from India. The data points used are 1990-91 to 2010-11. Log-linear model was used, for the purpose of forecast, the Indian GDP growth rate is assumed to range from 8.5% in the near term to 6 % in the long term on an average as the expected scenario in the period 2011-12 to 2030-31. The International GDP growth rate assumption has been taken to be 3.25% in the near term and 3% in the long term as the likely scenario keeping in line with the IMF expected GDP growth rates.