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India needs to modernise transport network to handle e-commerce


LOGISTICS networks in India and in developed countries suffer similar problems that induce inefficiencies within supply chains brought about by excessive fragmentation and an industry steeped in manual and paper-based practices.

But in India the problem is deeper because the country has a population that is realising the ease of ordering online and a transportation network that needs serious modernisation.

India's urban population is quite well-versed with e-commerce, but large swathes of the population in the towns and villages across India are still oblivious to shopping online or are uncertain of digital transactions. In such regions, mom and pop stores control a large share of the market, bringing in larger crowds than the ones that head to local department stores and supermarkets.

Nonetheless, the impact of e-commerce cannot be discounted. "The boom in e-commerce has led to a particular segment called omnichannel, which is experiencing some of the highest traffic today in India and China," said Pravat Rath, vice president of the retail business group at Tech Mahindra.

The omnichannel segment is the consolidation of the various ways through which people can shop, with the underlying idea about creating a seamless shopping experience for customers, irrespective of where they buy from, be it on the desktop, smartphone, or even a retail storefront.

Mr Rath further pointed towards the importance of having a central cross-country tax system, rather than a federal structure with individual states fixing different tax structures to suit their local economies, reports New York's FreightWaves.

The Indian government made a landmark change to the disparate tax structures by creating a single - Goods and Services Tax - (GST), which has now aligned the economy better and made it easier for e-commerce businesses to fix product prices evenly across the country.

In India, a National Logistics Policy (NLP) has been in the pipeline for several years now, with India's Union Minister of Commerce, Piyush Goyal, reviewing the NLP draft last week and proposing to get the ministries of railways, road, shipping and aviation to work together to reduce the overall logistics costs across India. Currently, logistics cost around 14 per cent of India's GDP, with the government looking to bring it down to 9 per cent.

"I believe a lot needs to be done at a policy level to address this situation. India needs proper infrastructure, a multimodal network that helps in faster movement of goods and services.

"A true multimodal network does not exist in India, and even if it does, it only remains in the corridors where there are railway lines and does not extend beyond that," said Mr Rath. "Creating multimodal hubs that connect roadways, railways, ports and airports, and to some extent inland waterways is critical."

Lakshmanan Chidambaram, president of Americas strategic verticals in Tech Mahindra, interjected to explain that India was undergoing a digital revolution, and that is helping to qualitatively improve the way logistics is done in the country.

Being a price-sensitive market, businesses in India will embrace technology instantaneously if it can deliver cost savings and improve operational efficiency. "Digitisation has made it easy to mount a project at minimal cost, measure efficiency and savings effectively, and scale it up successfully to a larger framework," said Mr Chidambaram.

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