Joining dots for Business
After real estate, the manufacturing and retail sectors are expected to bring the next boom in India. The rapidly growing market-driven emerging economy with plentiful labour, a booming retail industry, improving logistics infrastructure and relaxed regulatory norms will provide ample opportunity for logistics and transportation service providers to grow.
According to the World Bank Survey, India is at 39th position in the logistics performance index, with Singapore on top, and the UK, the USA and China at 9th, 14th and 30th positions, respectively. When global consumer product manufacturers initially started outsourcing to other countries, such as China, production costs were reduced considerably, making transportation and logistics costs to be no major concern for these players. Later, China invested substantially in infrastructure to provide a niche for logistics businesses in the country. However, high demand and infrastructure development considerably increased real estate prices for setting up facilities thus making manufacturing and logistics activities expensive. In addition, other factors, such as over dependence on one economy and monopolization by any one country, have compelled global businesses to search for a new destination for their manufacturing and logistics needs to avoid country-specific risks.
India, with its growing economy, has the potential to become the next destination for these global logistics players as it can provide all the ingredients for a successful logistics operation, with the additional advantage of diversification from country-specific risks. In addition, India has not only proven its efficiency in terms of expertise in the biotech, finance, accounting and medical care sectors, but also is growing by leaps and bound in other industries such as engineering goods, chemicals, and gems & jewellery.
Currently, logistics costs in India are higher in comparison to other countries, however, the Government's proactive approach to the infrastructure and transportation sectors will bring down logistics costs and, in turn, attract the interest of developed countries in expanding activities in manufacturing and distribution. Moreover, with the world's second-largest population and labour force, and consistent GDP growth, India will provide much-needed comfort to foreign investors in Indian logistics.