Last week government announces a new logistic policy, what does it mean for business owners? how are they gonna benefit from this? Let's see
Current problem – Railway is a much cheaper way of transport but only 17% of traffic is on the railway, 71% of transport happened on roads.
There is no good infrastructure available to transport goods from trains to trucks. Also, rail transport requires a lot of permissions & formalities there is no system in place to track the goods these problems force business to move their goods by road even it’s more expensive than railways.
Road transport also comes with its challenges Indian trucks travel around 300 km a day while the global average is 500-800kms a day which takes more time, and more cost & results in fewer margins. Truckers also lose 15/20% to middlemen who get them the consignment.
Currently India is working on point-to-point basis means If a truck goes from Amritsar to Delhi that truck didn’t get consignment while returning to Amritsar again. 50% of the time trucks come empty.
These are some of the problems currently faced by the Indian logistic Industry.
What will happen after the National Logistic Policy
- Government is going to reduce the paperwork & permissions required for the railway transport
- New junctions & stations are going to build especially for business purposes when goods can easily transfer to & from trains to trucks. New tracks will be built especially for business purposes
- India will shift from point to point basis model to a Hub model which means there will be hubs in central places from big cities from where the goods will be supplied to everywhere & since it’s a hub every truck will get consignment while returning to their cities.
- Government will also build a platform for business & truckers by which they can communicate directly with each other without the middle man which will improve the speed & margins as well.
- Right now business cant track their goods but with the help of the new system, they can track their interests anytime. The government going to take the help of private players also in doing that.
- Government will give tax exemptions and subsidies to companies who are building Warehouses this will increase the participation of private players & reduce the burden on the government.
These are some of the crucial points in the National Logistic Policy of India. Off course in a big country like India, it’s going to take some time to implement this but if we succeed then it’s going to be a game changer Bigger than the IT revolution of the 90s in terms of impact.
I would like to hear what you think about it. Connect either me on Twitter at @kpratik28