India may emerge as an effective container shipping hub, but are we ready?

According to a recent survey by Container Xchange, global supply chain professionals consider India, Vietnam as viable alternatives to China. The German container logistics platform surveyed over 2,600 industry professionals from over 20 countries to gather insights on the anticipated shipping and supply chain industry trends for 2023. According to the survey results, 67% of the respondents are of the opinion that India and Vietnam will emerge as effective container shipping hubs in 2023.

Another report by Global consulting firm Kearney, together with the World Economic Forum, highlights that the COVID-19 pandemic has disrupted global supply chains, exposing vulnerabilities and increasing the urgency to rethink and reshape supply chains. The report emphasizes that India has the potential to play a critical role in the reshaping of global supply chains, given its large domestic market, skilled labor force, and favorable demographics.

The Container Xchange survey further highlighted that most US businesses are looking to relocate to geopolitical allies to reduce dependence on China. India is already a powerful name in the automobile manufacturing sector, and big smartphone brands like Apple have already shown their commitment by setting up a factory in India. The recent opening of the Apple store in India was to emphasize the importance of Indian markets and Apple’s commitment to engage them. It is only time before others follow suit, but are we ready to seize the opportunity?

Let us look at some of the core areas that need to be stable or improved to ensure India a truly competitive alternative to China.

1. Logistics Infrastructure

For effective and competitive supply chain services, India needs to improve its logistics infrastructure. The Gati- Shakti Yojana, Sagar mala and Bharat mala are significant steps in this direction.

The budget of 2023 laid some concrete plans for the logistics infrastructure development in India and we look forward to its effective implementation.

2. Promoting Local Manufacturing

Impetus on local manufacturing will reduce import dependency and create jobs for the young population of India. It is important to improve ease of doing business in India. We have made some good progress on that front as, according to World Bank, we are ranked at the 63rd position in 2022 for ease of doing business among 190 countries, but we can work towards improving this further. Apart from this, to incentivize local businesses to compete with the world, the logistics and ancillary costs too need to be brought down and there should be policy intervention to support this.

3. Investment in Digitization and Technology

While the government is taking steps towards digital transformation by introducing Unified Logistics Interface Platform (ULIP), the onus is equally on the industry players to digitize and embrace technological advances to improve the logistics services within and outside the country. Tools and technologies that can improve visibility, prediction, warehouse management, and documentation should be considered.

4. Building Resilience

Diversifying trade partners and diversifying supply chains will go a long way in building resilience. While India is projected to be the biggest market, it is necessary to mitigate the risks. The aim should be to produce locally and supply to the local and global markets, at scale, and with speed.

5. Simplifying Regulations

Simplifying regulations is one of the most important point on which there have been vociferous discussions across quarters. Government needs to rationalise regulations related to trade and investment to make it easier for global businesses to operate in India. Streamlining customs procedures and reducing paperwork will save time and reduce costs for businesses.

6. Political Stability and Security

Another important aspect for building confidence in businesses is the political stability and the overall security situation in the country. The political stability gives confidence about policy continuation and predictable environment to operate in. Similarly, internal security ensures investor confidence as they are more likely to invest in areas like manufacturing plants, research and development, infrastructure and entertainment arenas.

As someone from the freight industry, we are hopeful and positive about all the initiatives being undertaken by the government. As an industry that contributes significantly to India’s GDP, it is time for us to seize the opportunities and work in tandem with other stakeholders to ease supply chains. Most of the South East Asian countries are in the competitive zone and every country is working towards providing a world-class supply chain environment, so it is important that we continue to look for ways to make India a highly lucrative option by establishing global supply chain hubs.