India loses Rs.1.5 trillion due to logistical loopholes

December 22nd, 2008 - 8:21 pm ICT by IANS  

Mumbai, Dec 22 (IANS) India loses around 3 percent of its total gross domestic product (GDP) or Rs.1.5 trillion because of supply chain inefficiencies, according to a survey done by a business consulting firm.India’s spending of 13 percent of the GDP is higher than that in the developed world; in the US, the spending is 10 percent of its GDP, Europe is at 11 percent, and Japan 10 percent, the report released Monday said.

The survey titled ‘Technology Survey for the Indian Logistics Industry - 2008′, conducted by Kale Consultants, said inefficient use of technology in the logistics business costs the economy billions of rupees.

The report further goes to state that significant strides in IT implementation could lead to bridging the gap in the supply chain, resulting in higher efficiency at lower costs.

While IT spends in Indian logistics industry currently stand at Rs.4 billion, it is slated to grow by approximately 22 percent CAGR (compounded annual growth rate) to over Rs.10 billion in the next five years.

“There is a lot of activity happening in this highly fragmented market. Family-owned businesses are growing in stature while global majors have committed huge investments for their Indian operations. The sector has already attracted investments of over Rs.20,000 crore (Rs.200 billion) in the first half of 2008,” said Sumeet Nadkar, head of Kale Consultants’ logistics strategic business unit.

The report also said the demand is expected from the western part of India, followed by the northern and southern regions. About 46 percent of IT investments are currently made towards capital expenditures, and the remaining 54 percent as operational costs.

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