Over the last decade, India has emerged from being just a large nation to be a global economic power closely tracked by governments, business houses and investors the world over. Testament to our economic strength was provided when we sailed through a recession that affected the world severely, proving that our growth story is here to stay. However we also have to acknowledge the importance of a key function that is going to allow India to capitalize on the potential that we are currently looking forward to. And that function is logistics. Logistic would allow us to consume global imported products, manufacture products that we could export to the world and trade and integrate ourselves with the global economy. The reality is that India spends about 14% of its GDP on Logistics costs while most developed countries devote 8% - 9% of their GDP on it. On a $1 trillion GDP, this represents $50 billion of extra Indian expenditure on account of inefficient systems and infrastructure. An example of this is visible when we look at the $2.5 billion India spent on fuel last year on account of trucks that stood on State border check posts for clearance. This is especially scary when we know that 65% of India’s domestic cargo currently depends on the road sector for being transported across the country. No wonder India loses approximately 35% of its farm produce to wastage on account of its poor logistics infrastructure through transport. I doubt India can afford such a wastage for too long.
Logistics needs to be fixed. It is far too serious a problem and someone needs to stand up and do something about providing integrated logistics solutions infused with supply chain management, IT control, international freight connectivity, state-of-the-art warehousing and value addition hubs along with customized rail movement. It took India 10 years to integrate all of this under one service and the journey was not easy but we were blessed with a good team that shares passion and commitment to the space and the country.
Arshiya International adopted a two-pronged strategy. It was our first mission to create an integrated supply chain lineage which will be asset light, but provide integrated services to our customers including international freight forwarding (Air & Sea), Project Logistics, Supply & Demand Chain solutions and IT services. We did this through creating Arshiya Logistics with a 140+ country freight forwarding network through global partnerships, a Joint Venture with a US based global supply chain major, Genco, under Arshiya Supply Chain Management where we brought their 110-year legacy of providing 4PL services to India and customized them for the Indian market place and also buying out a Singapore based IT company in 2006 and amalgamating it into Arshiya Technology that would allow us proprietary IT capability which can provide visibility and control to Indian customers. We now have about 1,200 customers to whom we offer various integrated logistics solutions.
And that represented the second phase of Arshiya’s evolution and that is its entry into building state-of-the-art logistics infrastructure and infusing it with its other logistics and supply chains offerings for being not only India’s but the world’s first ever fully integrated supply chain and logistics infrastructure solutions company. Our overall intention is to create rail-connected hubs for EXIM & Domestic Cargo by providing end-to-end logistics services out of these hubs.
I cannot help mentioning here that we were hit by the global recession like everybody else, just around the time we really started picking up steam in our infrastructure foray. I think it is a matter of great pride for me personally and Arshiya International especially that we were able to raise Rs. 2,627 crores for the Phase 1 of these projects during the tough economic times. Arshiya strives to be a game changer to play its part in empowering India to capitalize on its true macro-economic potential and showing the world that when there is a will ‘there’s a way’
Ajay S Mittal is the Group Chairman & Managing Director of Arshiya International Ltd
