Sleeping giant India faces all too familiar concerns

India has long been seen as a potential rival to China as the economic and trade leader among Asian countries. However, India appears to be its worst enemy in its attempts to compete for any such title. In fact, in an interview with an Indian newspaper, Rick Blasgen, President and CEO of the US-based Council of Supply Chain Management Professionals (CSCMP) noted that India’s biggest challenge remains poor infrastructure. According to Blasgen, “This country has the potential to come up as a supply chain centre of excellence of the world.”

Despite the promise this country holds, it faces issues similar to other emerging countries. India’s economy is facing tough times as inflation remains high, there is a volatile currency and slowing domestic spending. Also, HSBC’s monthly manufacturing report notes that India’s manufacturing sector activity contracted for a third straight month in October because of falling levels of production and new orders.

To add to the country’s woes, its largest sea port, the state-run Jawaharlal Nehru Port Trust (JNPT) has endured an almost month long labour dispute concerning wages.  According to JNPT, it handles about 57% of all freight traffic handled by major Indian ports. However, this is just the latest setback JNPT has endured and in fact, it is the second disruption in less than two months, as another private terminal at JNPT faced work stoppages over a wage contract dispute. That stoppage lasted for more than two weeks.

According to news reports, the labour dispute has resulted in trucks lining up for as long as 17 km waiting to enter the terminals to unload containers and freight. As such, some containers and other freight are being rerouted to other ports, thus creating additional delays and costs for shippers.

Meanwhile, JNPT is looking towards building a fourth terminal to lessen congestion problems at the port. In August, it received bids from eight private companies interested in developing the project. However, as the government struggles with its economic situation, it remains to be seen if and when the project will actually take place.

As India’s largest port struggles with labour disputes and there is a need to build an additional terminal to ease congestion, the interior of the country also desperately needs improvements. As Blasgen recommends, corporations need to build larger distribution centres to consolidate cargo.  He concludes, “If you can eliminate barriers and the congestion and create a road or rail system that will allow long-distance travel, then it helps in opening up markets.” Perhaps, this may be easier said than done as corporations will need to be prepared to take on the bureaucracy that, over the years, the Indian government has become known for.