India spends 14% of its GDP on logistics. The figure is below 8% for most of the developed economies including China. No, no it is not about transport costs. The developed world has 5.5% transport cost, and India has 7%. Just 20% higher.
The real cost is in inventory and warehousing. And for them being higher, Customs and other regulators are responsible. India has one of the highest Customs clearance times.
Japan keeps inventory for a couple of hours at worst, and mostly works on Just-in basis. It is so sure of its supply chain. Ask any inventory manager in India. He would tell how many BP tablets he takes daily, and the kind of money locked in stocks he needs to keep.
We have a situation that you obtain clearance from 149 Govt agencies and start the project. Still, the 150th will come and stop the work indefinitely. That is how we lost textile and ready-made garments biz to Bangladesh.
I don’t know who advises BJP. Privatising PSUs won’t cut down the Customer clearance time. Nor will sinking money in Logistics parks. Only by dismantling the regulation and clearance Raj the scene can be improved. Chinese exports are cheaper in India ONLY because of laws: the duty structure, regulatory and labour laws.
Privatisation will bring only electoral defeat. Results of Haryana and Maharashtra should tell BJP that voters can be really fickle. Both were held soon after 370.
Only taking on the three-lettered monsters in Delhi, the मायाजाल of government agencies, can enable us to move forward from here. All other slacks have been consumed. For example, on Monday the 4th Supreme Court summoned State Govt officers for Delhi pollution. NGT Suo Moto heard the case next day, on Tuesday, and summoned the same officers. If it was aware of Delhi situation, was it not aware that SC was seized of the matter? Why did it jump in? Officers were running back and forth between these two buildings. If SC can hear pollution cases, why do we need NGT? If NGT has to hear pollution cases, why does SC admit them?
We have a situation that you obtain clearance from 149 Govt agencies and start the project. Still, the 150th will come and stop the work indefinitely. That is how we lost textile and ready-made garments biz to Bangladesh. You will default on the loan, the bank will get NPA, You will be ruined and will search on the google how to purchase the Canadian/Australian passport. And voters will starve and bring the vote bank managers back. Only to starve quicker.
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