Roadblocks in the Logistics sector!!!

I was totally ignorant about the Logistics sector till one of the Big 4, asked me to prepare a report for them on the same. 

The Global Logistics sector is a whopping $5tn and India holds a miniscule 2 per cent share in the same. Despite being of immense importance to both businesses and individuals, the sector has been unable to attain the industry status. While the present Global economic crisis would result in a slowdown in the trade movement, there is significant potential for the sector. As per analysts, the sector would continue to grow at 16 per cent (CAGR) over the next few years.

Sadly, even after 62 years of Independence, India lacks tremendously on basic infrastructure. Infrastructure is the bedrock for the sector, however, has been unable to meet international standards thus posing a business challenges for several MNCs. As per a survey conducted by the World Bank, India ranks low on its LPI (Logistics Performance Index) due to poor infrastructure in comparison to other developing and developed nations.

Surprisingly most articles, reports and discussions on the Logistics sector mention about the percentage spend of the Logistics sector to the GDP (13 per cent in India), vis-a-vis other developed countries like USA (9 per cent) as extremely high. I guess, what these discussions seem to miss out on, is the same comparison in actual figures. While India's GDP stands at ~$1.1tn, USA is ~$13tn. So the high percentages don't justify India's spend on the Logistics sector. In fact, the converse should hold true since India is still a developing nation and USA has embarked on a robust infrastructure for years now. 

Too bad, that the estimated expenditure for infrastructural projects as mentioned in the 11th plan commission does not alleviate the worries for the various operators of this sector who are juggling with various other impediments such as low investments, less PE deals, drop in the GDP and a contraction in the IIP and export growth rates.