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Poor Logistics costs India $65 Billion Annually
SI Team
Thursday, September 30, 2010
Despite the Indian retail sector being in the high-growth mode, the country is losing $65 billion every year due to inefficient supply chain systems. The supply chain costs in India are about 12 percent to 13 percent of the gross domestic product (GDP) compared with 7 percent to 8 percent of GDP in developed countries, according to a report titled, 'Global competitiveness of retail supply chain-Challenges, Strategies and Recommendations' published by industry body Confederation of Indian Industry (CII) and Amarthi Consulting.

The report says that India is at 47th position on logistics and is behind countries such as Japan, U.S., Germany and China. The supply chain costs in India deal with the procurement, manufacture and distribution of products and services, and drive the success of the retail sector.

The retail industry in India, which is expected to grow over $879 billion by 2018, is a $410 billion market. Food and groceries account for 70 percent of the retailed items followed by textile and apparel at seven percent. The textiles and apparel segment represents about 40 percent of the organized sector, which account 95 percent of the retail sector.

The retail industry in India faces supply chain challenges like inadequate supply chain infrastructure, complex taxation laws, high levels of intermediaries, product proliferation and lack of supply chain visibility. Some of the key recommendations of the report are improving supply chain infrastructure, implementation of goods and services tax (GST), reducing intermediaries, and adopting green supply chain practices. Green supply chains involve integrating environmental thinking into the core operations of a company, starting from material sourcing to delivery to end-of-life recycling.

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