The Hindu Business Line : With exports growing... South needs a common logistics strategy

WITH `India Shining' becoming an attractive catchphrase, it would be worth examining the key linkages that will put the economy on asteady growth path. With the Government projecting a 10 per cent growth in GDP, there is an urgent need to focus on infrastructure to raise India's share in global exports from the present 0.67 per cent to at least one per cent by 2007.

India, particularly the southern States, has emerged as a major hub for multinational corporations (MNCs) due to low costs. This advantage should be exploited by providing world-class infrastructure facilities to harness the opportunities. The advent of an organised logistics industry had a major role in promoting trade. However, the industry alone could do little in its consolidation, let alone help in incremental growth.

If a comprehensive strategy is not evolved to harness the smaller ports, removing the regulatory barriers between the States and modernising the cargo complexes of the airports, the momentum gained by the region could face a setback soon.

Mr Sesh Kulkarni, Director, UT Worldwide (India) Pvt. Ltd, a logistics company, told Business Line that the southern States, which have emerged as the `growth pole', should adopt a common strategy to expand the infrastructure facilities to leverage on the region's traditional strength in textiles, engineering, marine produces, gems and jewellery, engineering and automobile and components.

The region's IT savviness should help in further reducing production and logistics costs.

"The political system in the southern States has been far more responsive to the changing necessities in line with the global environment. This should be galvanised for focussing on strengthening the infrastructure," Mr Kulkarni said.

With a large of ports (map) in the region, of which Visakhapatnam and Chennai have become congested, there is need to develop satellite facilities to help the States realise their full potential in boosting exports.

For instance, Karnataka, with exports over Rs 25,000 crore, has to depend on Chennai, Kochi or Tuticorin or the western ports, which costs time and money to exporters. Its own ports at Mangalore or Karwar are inadequately linked to Bangalore, which has emerged as a major hub for the global fashion industry for garments and jewellery, besides a key pharmacy production centre for international companies. Its potential in food processing does not attract investments due to poor road infrastructure from the hinterland.The seaports in the region handled cargo worth Rs 4,000-5,000 crore in 2002.

Air cargo movement is growing at 15 per cent per annum. And, yet, the airport lacks such basic infrastructure as a dedicated `cargo village' with large warehousing capacities and where all the forwarding companies can have their own operational establishments. Uncertainty over the Bangalore international airport has further accentuated the anxiety of the exporters, Mr Kulkarni said.

The southern region has a significant share in the country's exports. Tamil Nadu, emerging as a South-East Asia hub for automobiles and components, contributes 12 per cent of the exports from India. Home to major automobile companies, the State is emerging as an export hub for South-East Asia and accounted for 27.5 per cent of the total exports by the sector.

Karnataka also has major automobile companies, with Toyota's component unit near Bangalore becoming its global hub. Andhra Pradesh's potential is in agro-processing and it expects to become amajor rice exporter.

India should reduce its dependence on ports in Singapore and Colombo for transhipment of cargo, Mr Kulkarni said. "We should develop the capability for berthing the mother ship in our ports to eliminate the transhipment time and the related cost to exporters."With India expected to play a pivotal role in the SAARC region, developing a well-integrated infrastructure, he said, would help it emerge as a major production/export hub.

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