The Hindu Business Line : ‘Industry status for logistics sector must’

Chennai, Sept. 20 The country’s logistics sector needs an industry status to avail itself of various benefits, including access to finance, according to Mr R. Narayanan, Director, KPMG Advisory Services, a consultancy firm.

The Rs 4,50,000-crore industry contributes nearly 13 per cent of the country’s gross domestic product (GDP). But, it is yet to get an industry status, he said at ‘Logistics 2007 – Powering growth through logistics innovation and integration’, organised by the Confederation of Indian Industry.

The sector is very big, and will grow bigger in the next few years with huge investment planned in road, rail, air and warehousing, he said. The sector employs nearly 40 million people. According to international consultants, Drewry, the GDP growth could be accelerated by 1-2 percentage points if logistics bottlenecks are removed, he said.

An industry status could facilitate in removing bottlenecks such as streamlining of policies (like Carriers Act); better image for the industry; easier access to finance; industry/commercial tariff for power and water and creation of government body/association to interface between the government and the industry and a body for export promotion. Mr Narayanan said out of the Rs 450,000 crore, about Rs 20,000 crore is spent on organised outsourced logistics. And industry status will increase the latter’s share.

Mr A. Balasubramanian, Principal-Advisory Services, Infrastructure Development Finance Company Ltd, said minor ports (under the State Governments) are more attractive for investment than major ports. This is due to freedom from tariff regulation; no labour militancy issues; no need to take over public sector labour unlike major ports and freedom in project development and port operations with minimum stipulations.

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