GST brought in its wake certain benefits that were welcome for the logistics industry. Manufacturers are now more than willing to outsource logistics and supply chain operations. The state government should adopt the sunrise industry to give a big push to economic growth.
The growth of the logistics sector is an indication of a country’s economic progress. In India, the industry is poised to grow vertically. Logistics is not just transportation; it travels through various services like packaging, storage, handling and shipping along the way.
Tamil Nadu has the 3Ps, viz., people, policy and port for the manufacturing industry to prosper. However, for the industry to thrive, both the supply chain and last mile connectivity should be strong. Logistics companies play a crucial role in managing the supply chain for the companies and delivering goods for the customer through the last mile.
EVOLUTION OF INDIAN LOGISTICS SECTOR
The Indian logistics sector, in the pre-GST era, was struggling to add value to its customers compared to its global peers. Indian companies were seen as a labour contractor or a mere transporter. But post-GST, the equation has dramatically changed. Manufacturers are looking to optimise their supply chain and ready to outsource planning to logistics players. The latter has invested in technology and operate with a focus on quality. These players are seeing a definite shift in the mindset of their clients.
Implementation of GST has opened-up opportunities for the logistics industry. This would help the sector to achieve growth through value-added services. The market size can touch $250 billion in the next two years. As per a latest survey, the industry provides livelihood to 22 million-plus people which is expected to double by 2020. The reason for the multiple innovations is the spread of last mile delivery requirements, cloud-based GPS tracking, product-wise tracking systems and other related technologies using IoT and RFID. This has meant that significant investments are being made in this sector. These tech upgradations will be propelled by the substantial investments in infrastructure. India, Asia’s third-largest economy, is planning to spend 5.97 trillion on infrastructure development. This will further increase the need to concentrate on better capacity utilisation and capability development.
LOGISTICS DEVELOPMENT IN TAMIL NADU
Tamil Nadu is among the top six states in India providing good logistics support to customers and trade. The state is situated to offer the ideal connectivity as it has an extensive coastline and well-developed airports which are well linked with the national highways. Tamil Nadu’s transport sector has been a pioneer. Namakkal and towns around it have provided transportation services across the country and more than 40,000 trucks are owned and operated by people from this region!
While connectivity to Tier 1 and 2 cities are excellent, there is an urgent need to improve linkages to Tier 3 and 4 towns. The eight greenfield road projects, which are in the pipeline need to be expedited and the considerable economic benefits need to be explained and made aware to the stakeholders so that these projects are developed in a focused manner.
Development of Smart Cities is a key focus area. The Smart City Infrastructure and Planning team has to take cognizance of the need to ensure seamless delivery of all goods to end-consumers. Any plan should take into account smarter ways of utilising the asset. This is where technology has to play a key role, and city
planners, along with logistics players, have to work together to evolve strategies.
MULTI-MODAL TRANSPORT AND EMPLOYMENT OPPORTUNITIES
Thanks to the three major ports and 17 non-major ports, Tamil Nadu has a capacity of handling 15 million TEUs. India’s first Rail Auto Hub was inaugurated in Kanchipuram in 2016. The key to the development of this hub is to define the linkages between these modes and to provide high-quality road linkages to the rail and port hubs. The state should take the lead in the integrated planning of this multi-modal concept and create a seamless and paperless solution. This will further enhance Tamil Nadu’s competitive position and increase the ease of doing business.
The logistics sector is mostly manpower intensive industry and requires specific skill sets at multiple levels. While training people for being ‘job-ready’ is challenging, one cannot ignore the opportunities that this industry offers. According to an HR report, the sub-sectors like road freight, rail freight, warehousing, waterways, air freight, packaging and courier services will create over 2,45,000 new jobs in Chennai region by 2022. Further, the infrastructure growth in the state will provide several thousand incremental jobs in warehousing, road freight, etc.
The Ministry of Skill Development and Entrepreneurship (MSDE) and National Skill Development Corporation (NSDC) have created Logistics Sector Skill Council (LSC) as an industry apex body at the national level to establish itself in the skill ecosystem. Tamil Nadu can take the lead in this initiative as well by tying up with all logistics companies. The government should support the development of industry-driven training and apprenticeship programmes to not only have skilled manpower but also certified workforce that will help the state attract more investments from both logistics companies and from user industries.
By 2022, the average age of an Indian will be 29, and we would be the world’s youngest population. To cater to this vast talent pool, LSC is working closely with industry and academic institutions to come up with custom-made courses. For instance, Degree Apprenticeship Programme (DAP) is the first of its kind three years course in India for logistics sector aimed at school drop-outs. There will be three semesters of academics and three semesters of industrial apprenticeship. The semesters are intertwined so that the candidate will be able to apply his knowledge in practical situations. Students will also get a stipend from the company where they work. At present, LSC has tied-up with five institutions and is aiming to have 15 tie-ups by March 2019. Going forward, students who pass out with specific skill sets will not only be able to work within India but also internationally.
Tamil Nadu can lead by being the catalyst for such industry-academy partnerships. It can help get tie-ups with companies which are based overseas through these institutions. This will further attract the best talents to the state.
GOOD PROSPECT FOR AGRICULTURAL PRODUCTS STORAGE
Tamil Nadu is a wealthy producer of agri-commodities. The logistics policy needs to specify how the government will create zones, logistics parks and other infrastructure for increasing the temperature control and ambient temperature warehousing infrastructure for agricultural produce.
Linking these with the food processing industry, the way to store and sell to the end consumers, will improve the prosperity of the farmers and save more than 30 per cent wastage. Today, the challenge is not only of remunerative prices to the producer but also the inability to store. Tamil Nadu must take the lead by using the data available to determine what products can be saved and prepare a master plan for warehouses to be set-up.
Tamil Nadu has been a leader in bringing in path-breaking practices. Logistics and Supply Chain as one of the sunrise sectors, has to be adopted by the State Government. The State has the required resources that include the benefit of providing multi-modal solutions. With right policy measures and effective implementation, Tamil Nadu can achieve the ‘numero-uno’ status in the logistics sector.