Strategy for Indian Logistics companies when Rupee is falling (comments published in Logistics Times, September,2013 issue)
Prof. Akhil Chandra
The continuous slide of Indian Rupee against
Dollar is a cause of concern and shall have some definite effects on Indian
logistics business. One has to move from disadvantageous situation created due
to free slide of the Rupee and focus the efforts to the areas where new
opportunities shall get created during this state of crisis. It can be a
blessing in disguise for some.
Policy makers are striving hard to contain
current account deficit (CAD) and all out efforts are on to contain the import
and increase exports and check the volatility in the foreign exchange market..
In order to curtail imports, Government of
India shall have to revitalize manufacturing sector which unfortunately during
last few months is showing even negative growth. Existing manufacturing
companies also shall have to resort to cut down the imported content and find
indigenous ways. This shall require innovative ways and new R&D efforts for
survival.
Here lies the opportunity for logistics
companies to strengthen inbound logistics which can prove backbone to the
manufacturing companies by transporting raw material and components required by
the shop floor of manufacturing company at the right time, at right quality and
at right price.
While outbound logistics is at a fairly
matured stage in our country, inbound logistics is still at a nascent stage and
it is the right climate now that logistics companies tie themselves up with
manufacturing companies closely for a long lasting relationship with them.
Other opportunity for logistics companies lies
in earning foreign exchange for the country and cross the national frontiers and provide consultancies in neighboring
countries like Bangladesh, Nepal or African countries and nearby middle east
countries to start with.
On the export front, as a matter of fact our
performance since last 12 years has been quite impressive and is much higher at
20 per cent than the world average of 12 per cent but our imports have grown
still higher touching the rate at 28 per cent. So logistics companies which are
tied up with exporters shall still have to work harder to help existing
exporters to expand their business and become competitive in terms of
efficiency, time and service.
Few foreign companies may have to run away
from the country as probably their royalty payments etc. in dollar term may go
down and that space must be filled up by big and tough indigenous players both
in manufacturing and logistics sector. When things start becoming tougher it is
the tough who get going.
Prof. Akhil Chandra
Consultant
Logistics and supply chain management
