‘The India Story’ can be a success only with thriving Supply Chains

India is ambitious and not hiding from the fact that if it wants to be the third largest economy in the world, it needs to increase its manufacturing output. Currently India is a service dominated economy and while this will continue to be our strong suit, we cannot afford to ignore manufacturing and logistics. recent research, cross-border trade represents 20% of global e-commerce and is growing at a 2x rate than domestic e-commerce.

The Indian government and economy experts are on the same page here if we see the recent events. The announcement of The India-Middle East-Europe Economic Corridor (IMEC), on the sidelines of G20 is a major indicator of this. The upcoming Logistics Framework by the end of September and government’s commitment to raising manufacturing to 25% from current 17.7% of the GDP by 2025, all indicate that the government wants to improve and expand the manufacturing and logistics sector.

Recently, PM rolled out a mix of tariffs and incentives to attract companies to ‘Make in India’ as many businesses are looking to diversify from China. While this is a great opportunity for us, it is important that India acts fast to ensure the advantage stays with us. Small countries like Vietnam, Bangladesh and Taiwan are developing themselves as a credible manufacturing hub. The investor confidence is high there.

For India to be seen as a more reliable manufacturing partner, we need to develop a holistic approach as the long-term success in the global manufacturing landscape hinges on it.

India's ambition to become a global manufacturing hub hinges on three key factors

The first critical factor is the opportunity to establish robust supply chains, and routes like IMEC will do that. The current geo-political situation has made it imperative to have such robust supply chains in place.

The second factor involves aligning physical production infrastructure with digital capabilities to offer cutting-edge products to the world. India's Performance-Linked Incentive (PLI) scheme, encompassing fourteen sectors, is expected to boost exports and drive innovation for product differentiation.

Lastly, India's path to manufacturing prominence demands a focus on workforce skilling, innovation, quality, and sustainability, rather than relying solely on cost advantages.

The Importance of an Efficient Supply Chain in India's Development

A robust supply chain is the lifeblood of any thriving economy, and India is no exception. Streamlined and strong supply chain will heighten India's ability to efficiently move goods from manufacturers to consumers and markets.

An effective supply chain reduces lead times, minimises costs, and enhances overall productivity. It allows businesses to respond swiftly to market demands, ensures the availability of essential goods, and promotes economic resilience.

Furthermore, an efficient supply chain empowers MSME’s to participate and be competitive at a global scale. Currently, India has the power of 3 D’s - Diversification, Dividend and Demand, which makes India a lucrative market as well as a global manufacturer.

The early success that India achieved with smartphone manufacturing, like Apple and Samsung, should now be replicated in other sectors as well, and logistics will play a key role here.

India has made striking progress in four of the six World Bank's Logistics Performance Index (LPI) indicators, encompassing infrastructure, international shipments, logistics quality and competence, and timeliness; climbing 6 places in the LPI since 2018, now securing 38th position among 139 nations. This remarkable ascent not only reflects India's growing digital and infrastructure initiatives but also holds immense promise for its future on the global stage.

Things that we need to work on to improve this record even further are –

Free Trade Warehousing Zones (FTWZs): Boosting Exports and Attracting Foreign Investment

Free Trade Warehousing Zones (FTWZs) have proven to be a game-changer for India’s logistic landscape. By providing state-of-the-art infrastructure and streamlined customs procedures, FTWZs have become magnets for foreign investment. These zones offer a seamless platform for businesses to store, process, and export goods with ease, making it a destination for global manufacturers and traders. Not only do FTWZs bolster exports by enhancing logistics and reducing costs, but they also promote job creation and technology transfer. As of now there are 8 approved free trade and warehousing zones in India of which 3 are operational. All these are developed by private developers. As the number of operational FTWZ grows in India, they will play a pivotal role in attracting foreign capital and driving the nation's economic growth.

Skilling the Workforce

As manufacturing grows, we will need allied services and logistics to make the home grown manufacturing competitive. We will need a skilled workforce to achieve this. India is in the population dividend zone, i.e we have a large working population which can be creators as well as consumers. This workforce needs to be skilled to make them at par with global standards. To achieve this, skilling programs at universities and finishing schools is essential. Sectors like logistics, too can emphasise on continuous training to ensure their workforce is at par with the global workforce.

Increased digitization

Digitization is rapidly transforming the way businesses and governments around the world are functioning. India’s thrust for digitization and sustainability is well documented and hence it is only natural that these factors transform the logistics sector as well. Increased digitization, both at government and partner level, will improve transparency, reduce red tape, boost business confidence and help ensure standardisation.

Push for Automation

India needs to focus on being known for its quality, speed and reliability. This can be achieved with greater innovation, increased automation and focusing on ensuring that the workforce is agile and equipped with the latest knowledge and technology.As an integrated logistics service provider, we are excited about this opportunity. There is a collective responsibility on all stakeholders to seize the opportunity and make the most of it to become the third largest economy in the world by 2025.