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INdIA


ISSUE 2 2010


Indian logistics - is the industry ready for the 21st Century?


farm produce in India rots before it can be consumed, which is a serious issue for a developing country.” This is partly because of the


number of middlemen involved and the resulting number of hand-offs between one party and another. Jetco has set up a number


of workstreams analysing how the supply chain can be strengthened, the need for skills and training and how UK supply chain companies can be involved in the process. The expectation is that the proportion of multinational firms involved in the sector will increase to perhaps 12% by 2020. “The supply chain in


India is underdeveloped because retailing in India is underdeveloped,”


explains


Kevin McCole. “Supermarkets have only just started to materialise, and it is these that will drive the demand for a more sophisticated supply chain.” Tesco and Wal-Mart are both present in India, but for the present only in the wholesale sector and in partnership with local firms, due to restrictions on foreign companies in local retailing. However, there are still a lot


of political issues to be resolved – the Government is reluctant to move too hastily and put Indian-owned companies out of business by completely opening up the market. “The idea is to open up gradually, to give the smaller businessmen time to


continued over


Recession or not, India is still building transport infrastructure at a furious pace. Roads, railways, deepsea container ports and airfreight terminals, public and private sector, and in all parts of the country – the global downturn has scarcely affected the country’s determination to rid itself of its still creaking infrastructure and drag itself into the 21st century. One example, out of many


is the MIHAN (Multi-modal International Hub and Airport) development in Nagpur city in Maharashtra province in the heart of India, says Kevin McCole, chief operating officer of the UK India Business Council. Already a major highway and railway


and repair operation. Cochin meanwhile has been earmarked as a site for one of the country’s new generations of container ports, capable of handling the new generation of 13,000teu vessels that have until now largely been excluded from trades to and from India. DP World is pumping in up to $1bn into the new terminal, which could soon challenge Colombo as the subcontinent’s only truly modern box port. Roads, too, are being developed though progress can often seem like a drop in the ocean measured against India’s huge pent-up demand and vast distances. At the moment, the ‘Golden Quadrilateral’ linking


network has been handed to the ambitious commerce minister, who has a reputation for getting things done, says Kevin McCole. “India is currently building 2 kilometres of road a day – but he wants 20km a day. And there are currently 25 contractors working on the roads – he wants 125.” To achieve that, India will have


to bring in foreign expertise. The Indian government has been courting UK construction firms and the UK India Business Council has been instrumental in setting up a British India Roads Group, which brings together experts in finance, the legal profession, equipment suppliers, engineers and materials suppliers. “We’ve brought together many people who in the past might have walked away from India as being too difficult,” explains Kevin McCole. “Many of the contracts currently being offered in India are just not attractive to foreign firms, so the Government asked us how they could do things differently.” As part of this process, the Roads Group has produced a shadow bid for a 1,000km contract which, it is hoped, will lead to more contracts for UK firms. In the past, many Indian roads


junction, the plan is to develop Maharashtra into an airfreight and logistics hub to take advantage of the city’s strategic location. Boeing is interested in building an aircraft maintenance


the four major cities of Delhi, Mumbai, Chennai and Calcutta are linked by four-lane highways that offer something like modern-day standards, but the task of further developing the


have been built down to a price; little attention has been paid to the quality of the materials or the design of the road itself, and many of India’s new dual- carriageways are now having to be rebuilt, sometimes after as little as two years. Companies


like Britain’s Serco are among the world’s leading experts at highway management. India’s roads, then, are improving, although the age of ox-carts on the Grand Trunk Road is not quite yet passed, especially away from the Golden Quadrilateral. Roads are also heavily congested in the major cities, although metro and light rail systems are beginning to take up some of the strain. Building long distance roads


is slow and laborious, partly because of India’s very complex land ownership. Meanwhile, the number of cars is growing all the time, so getting trucks from one end to the other of this vast country is still a time-consuming process. A less visible part of the modernisation of India’s transport system is the adoption of supply chain management practices. This is one of the issues that the UK-India ‘Jetco’ (Joint Economic and Trade Committee) is now pursuing, with the UK India Business Council acting as secretariat. The science of supply chain management has as yet scarcely made its mark in India. “Around 95% of the transport market is made up of small players who don’t have the resources to cover the whole country, nor do they have the technology to do so,” says Kevin McCole. They lack basic facilities like cold storage or, in many cases, even covered vehicles. “As a result, 40% of


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