Logistics bottlenecks hamper GDP growth by 2pc

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Mumbai, Apr 21: India is missing out an additional two per cent of GDP growth due to logistics and transportation bottlenecks, a report on Indian Ports sector here says.

The report presented at a seminar on ports Federation of Indian Chambers of Commerce and Industry (FIOCCI) by consultancy firm Ernst&Young, quoting industry sources said logistics cost in India were high at 13 per cent of the GDP compared to 11 per cent in Japan, ten per cent in Europe and nine per cent in US.

Ports being an intergral part of the logistics chain, need to improve their efficiency levels and become world-class to handle growing cargo traffic and stay competitive in the process.

Indian ports handled 519 million tonnes of cargo last fiscal, registering a 12 per cent growth over the previous year and six ports clocked double digit growths, according to the report.

Presenting the report, Ernst and Young Rajesh Samson said, the growth of ports and shipping has been slow. However, with considerable private investment flowing into the Indian port sector, it is moving towards a stage of fast development. ''We are sure that with the right impetus, this sector will soon grow to be an essential part of the country's future growth'' he added.

The report highlighting the current scenario of Indian ports and future trends emphasised the key ingredients of transformation of Indian ports, while suggesting way forward to implement them.

It called for increasing competition in the port sector through privatisation and called for focussed infastructure development along with the related logistics chain besides emphasising on trade facilitation and value added services.

It said Indian ports were today operating at 90 per cent capacity utilisation, indicating that there was a huge demand for cargo as well as stagnant capacity. This has led to immense congestion at ports, consequential delays incargo handling and longer turnaround of ships.

Stating that ports have been very low users of Information Technology, the report called for impelementing systems such as PortNet and TradeNet of Singapore to improve the service levels.

An analysis of existing IT facilities indicated that Indian ports were struggling to provide basic infrastructure and were equipped to offer only Electronic Data Interchange services ad limited online tracking.

In Mumbai port, more than two third of the processes have low level of IT enablement. They have a long way to go to set up integrated port infrastructure and management systems, the report added.

Speakers at the seminar lamented over the lack of private sector partnership in the infrastructure development of the country. It was hardly one per cent of the total infrastructure spend till a few years ago, they said. Kandla port Trust Chairman Praveen Agarwal went ahead and blamed the traders for not taking up necessary measures to enhance the infrastructure in ports. He mentioned about the wild protests raised in Goa for the development of the Port there and said there was also lack of political will in taking up development.

A stretch of 1.3 km of road to link the Marmagoa Port saw huge public protest as 400 families living in encroached land did not want to be rehabilitated to a better place with an investment of Rs 30 crore by the Port authorities, he said adding that traders had remained silent on the issue. Adequate lastmile linkages by rail and road could enhance considerable increase in cargo shipment, he added.

He also said that the Indian ports were increasing their capacities, but lack of manpower, dredged capacities and costs managed by cartels, were coming in the way.

Nautical adviser to Government of India M M Saggi said the shipping and port sector has not attracted even a single Foreign Direct Investment despite tremendous potential which the sector offered.

He said that over the next five years, the capacity of Indian ports will triple to around two billion tonnes from the current six million tonnes.


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