If India doesn’t smooth the kinks and create a world-class infrastructure, it can kiss its $5 trillion economy dream goodbye
Developing transport connectivity across the country has been the endeavour of the Government since 2014. Indeed, this is essential if programmes like Atmanirbhar Bharat and Make in India are to succeed and the country is to be a global manufacturing hub and a vital part of the supply chain. An increase in the efficiency of the transportation network will invariably lead to lower production costs due to cheaper transportation/logistics dues. This will increase the competitiveness of the Indian economy and make the country an attractive manufacturing hub.
We tried to understand the state of transport infrastructure in India by examining some major domestic routes along which a majority of cargo is moved. Expectedly, the routes we examined include the Golden Quadrilateral, the north-south, east-west transport corridors and the upcoming dedicated freight corridors. In general, the origin and destination of each route corresponds to metros or Tier-I/II cities, where the transport and warehouse hubs and manufacturers or producers are located.
These routes were identified based on in-depth interaction with transporters/Third-Party Logistics (3PL) players. The stakeholders’ perception was sought on road conditions, including signage, unavailability of intermodal exchange points, limitations in terms of rail infrastructure and limited infrastructure in terms of parking terminals with refreshment facilities for drivers. This was on a scale of one to 10. Whereas one implied that the challenge was small, 10 referred to a high-intensity problem. The overall rank of a route was estimated by taking the simple average of the scores of individual indicators. According to the perceptions of the transporters/3PL players, the top three efficient routes in respect of transport infrastructure are the National Capital Region (NCR)-Hyderabad passage, NCR-Chennai and NCR-Nagpur. By contrast, the three most inefficient routes are NCR-Guwahati, Mumbai-Kolkata and Bengaluru-Kolkata. In general, the nodes of the five most efficient routes lie in the western/northern/southern zones. By contrast, at least one of the nodes of the five least-efficient routes was in the eastern/northern zone. Clearly, development of the transport infrastructure is must in the eastern/northern region if one has to convert it from a consumption to production zone. It must be acknowledged that the NDA Government has clearly made a move in this regard with multiple connectivity projects in terms of roadways and railways. Coming to the status of the routes in respect of individual indicators, the NCR-Hyderabad passage faces the least problem with regard to the “unavailability of intermodal exchange points” and “limitations in terms of rail infrastructure.” The worst performers for these two indicators are NCR-Mumbai and NCR-Guwahati, respectively. In terms of road conditions, the Mumbai-Hyderabad route is comparatively the best while the Mumbai-Kolkata route entails the maximum challenges. By and large, the scores in this indicator were below five, revealing that significant progress has been made on this front.
On the other hand, the score in respect of railway infrastructure was in the range of six-seven, barring the NCR-Nagpur route, suggesting that the railway infrastructure needs to be improved so that it does not drag down the growth of cargo movement in the country. As regards the challenges of limited infrastructure in terms of parking terminals with refreshment facilities for the driver, all the routes face a high degree of problem with scores hovering in the range of seven-8.5. In respect of this indicator, the NCR-Mumbai route is comparatively the best while the NCR-Hyderabad passage is the worst performer. In sum, the routes whose nodes are located in the western/northern/southern parts of India are more efficient than the others. By and large, all routes for which at least one node is located in the eastern part of India, score poorly in almost all indicators. Hence, the policy measure is clear. There is need to pay greater attention to the development of transport infrastructure in eastern India.
The key takeaways on hard infrastructure from open-ended interactions with stakeholders are as following: Lowering logistics costs means there is a need to shift cargo movement from roadways to railway. However, this is possible only if freight trains run on schedule and freight railway terminals are modernised so that loading/unloading of cargo takes minimum time.
There is a need for rapid innovation in bimodal transportation equipment in the country, like the roadrailer, which runs as a semi-trailer on the road and moves as a wagon on the rails. This facilitates seamless door-to-door transportation with minimum handling of the cargo at the rail terminals.
While the Union Government is pushing for use of inland waterways for freight movement to lower logistics cost, the picture on the ground is not very rosy. For instance, even after construction and inauguration of a multi-modal terminal on the Ganga River at Varanasi, the facility is not being used due to the lack of efficient highway and rail connectivity for inward/outbound cargo from the terminal. Plus, there is need to pay more attention regarding the maintenance of the existing transport-related infrastructure.
No country, which is seriously considering being in the running for the global manufacturing hub tag, can make the mistake of ignoring the state of its transport infrastructure. If India doesn’t smooth the kinks and bottlenecks out of the existing one and create a world-class infrastructure, it can forget giving China any competition in the global supply chain realm and kiss its $5 trillion economy dream goodbye.
(Gupta is Senior Advisor and Pohit is Professor at NCAER. The views expressed are personal.)