OVER the last 18 months the Narendra Modi-led government has taken many positive steps to revive and bolster the economy, with a view to improve and upgrade infrastructure in the country. Among the many big projects undertaken by the government, Smart Cities would clearly define the future of India’s urban infrastructure.
This ambitious yet urgently-needed project promises to transform 100 cities across India and make them ‘smart’ and ‘future-ready’ for generations to come. It is here that we see a great opportunity in nation-building. We see a role for the logistics sector not just in laying the foundation of these cities but also in playing an integral role in managing logistics on a day-to-day basis.
Planned logistics can reduce congestion, noise and environmental pollution that ail all major, bustling cities in India. However, city administrators and planners often forget to factor in the importance of end-to-end solutions provided by the logistics sector. More often than not, planners generalise this important element by combining the need to improve transportation and logistics. This may be one of the main reasons for India dropping from an already low rank of 46 to 54 in the World Bank’s Logistics Performance Index released in 2014.
Despite aiming to make our cities smart with better buildings and facilities, we have never viewed our logistics competencies from the perspective of trade logistics. A strong logistics network is the backbone of all commercial activities in a developed economy. Smart movement of goods within cities will become essential as the stress on efficiency increases. Investing in logistics infrastructure is essential to build better and larger in the future. Not investing in logistics will be under-leveraging development and economic growth opportunities.
Smart Cities will give Indian authorities a reason and an opportunity to revamp the country’s aging infrastructure and replace it with world-class solutions using cutting-edge technologies. According to a study of road networks in India, conducted by Roland Berger Strategy Consultants, only a miniscule 0.02 percent can actually be used for high speed transport. The total length of expressways in India is approximately 1,000 km while China has a staggering 74,000 km. Moreover, the average truck speed of 30 km/hour is significantly slower than the global average of 70 km/hour, which directly impacts delivery time and, hence, costs. The situation worsens when you take into account the current structure of toll collection, state border crossing procedures and harassment of drivers, which leads to further inefficiencies in road logistics.
There is a lot to learn from the West but most of the solutions we develop will need to be customised to suit local needs. For instance, the European Union leads in transforming existing cities into smart cities. Ten out of the 20 top performing economies in terms of logistics are in the EU. One should keep in mind that most of these cities are at least a few centuries old and of deep historical importance. Cities such as Lucca and Vicenza in Italy, Trondheim in Norway and Bristol and Dundee in the UK are a few shining examples of how to transform centuries-old towns into smart cities meant not just for the public but also for business and trading communities.
The transformation witnessed in these cities is not the result of overnight decisions. It is a result of research and initiatives taken decades ago to improve the quality of roads, develop inter-modal connectivity and good governance. Heavy investments have been made by these city administrations in IT and communications. The EU has put aside €250 billion for investment into capacity building and €6 billion for R&D, specifically for transportation, as a commitment towards linking better logistics to these smart cities.
The expertise of those responsible for such success stories in Europe is now being brought to India. Sweden is one such example, which recently offered to turn Mumbai into a Smart City by 2034.
As a rule of thumb, the logistics sector in India grows at close to double the rate of the country’s GDP. With the GDP of India set to grow at a fast rate, as per estimates for the next few years, prospects for the logistics sector are definitely sound. The upward growth movement by the sector has been further aided by steps that the government is taking in the right direction. Dedicated freight corridors are being expanded even as cargo trains are being made longer, enabling them to carry more goods. British-era networks are also finally being modernised and made significantly faster to facilitate better transport.
However, despite the good intentions of the government, the industry faces many challenges. The long-pending implementation of GST will be a massive shot in the arm for logistics, trade and transport when implemented. The Land Acquisition Bill can also benefit logistics infrastructure developers immensely. Clarity on the Bill can help foreign investors, who are currently sitting on the fence and wanting to participate in PPP projects, and provide much-needed liquidity to the sector. The Bill can also help expedite delayed logistics infrastructure projects, and flag off new ones that have been on the drawing board for some time.
The logistics sector is the on the cusp of witnessing its biggest growth story. Every stakeholder is geared up and set to partner with the new government in helping it realise its dream. However, the success of ambitious projects such as the Smart Cities Mission will depend largely on the vision and plan that we prepare and the willingness to reach our destination, regardless of the hurdles.
