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Steep logistics cost hurting Goa’s appeal as mfg destination

Man lives on hope. It is a very strong emotion that can drive one a very long way. The Goan businessman is one such creature. Operating in a market generally devoid of positive sentiment can be tough and in a market that is so small, everyone has to look beyond the State’s borders to generate adequate business. This requires smooth operations and a great logistics system in place.

Time is of the essence in these competitive days. An excellent logistics system is vital. What is the general sentiment amongst the operators in the logistics business in the State?
Sandeep Sood, director at Express Machines & Scaffolding Private Limited was quite resigned when he said “Nothing has picked up. We are living on hope. Things will improve. I am confident and this is based on developments on the ground. There are some expansions in Verna. Companies are expanding their capacities and so we expect business from existing customers to increase. If the mother industry increases then our business will improve. But sustained growth is what we are looking for. Maybe we will see something in the coming months.”

He felt it was important for the State to start conducting its economic affairs on a larger scale. This would require better land management. He said the government was seized of the matter and was keen on out of court settlements. This would help release land which could be allotted to industry and there was no other way. Business was necessary to be generated for money to be earned by the players in the logistics business.

Vasco the city was built around the port and with business badly hit, its effects can be felt in the city. The Goa Shipyard is still doing well and the game changer was supposed to be the contract to build mine sweepers. The shipyard had invested in infra but the delay in the award in the contract has not helped matters. According to a source who did not want to come on record that contract has in all probability gone to the Vizag Shipyard.

The situation however may be brighter in the future with major changes in the offing. Suresh Prabhu, Minister of Commerce and Industry and Civil Aviation, made couple of visits to Goa and his Senior Under Secretary had visited the State. He had set up a separate cell for logistics in the ministry and it is expected to get an industry status soon.

Mr Sood felt that once this was in place the situation would improve, finance would be available and new infra structure could be created which would help the logistics business.

Chandrakant Gawas, head of the logistics cell at the GCCI felt with the CM now back, the wheels would start turning again and with Nitin Gadkari, current Minister for Road Transport and Highways the logistics business would be helped with changes in the infrastructure.

Manguirish Pai Raikar, chairman, MSME National Council of Assocham felt the problem in Goa was cost. Mr Raikar said “95% of the pharma manufactured in Goa is exported via Mumbai. If it is sent from Goa it is transhipped to Dubai which is very expensive. You can send it via RORO to Mumbai and from their abroad for $25 whereas from Goa it will cost you $200.”

The cost of logistics in the entire process was way too high at 14% whereas in the top ranked countries in exports it is 8%. The government was working on reducing it to 9% by the year-end with the creation of new infrastructure. Perhaps the State could also look at trends like Blockchain which will make the entire transactional process impenetrable to any threats to security.
Logistics companies that adopt blockchain in their processes will increase their credibility among clients while also making it easier to track consignments. The importance of automation will increase too. The importance of automation is increasing and more importantly it reduces costs.
The State will have to learn to get moving and react fast to developments that are taking placed if it is to find its place under the sun. If industry is to be profitable it will need a dynamic and evolving logistics industry. [H]

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