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TABLE OF CONTENTS
1. Introduction 3
2. Executive Summary 5
6. Recommendations 12
7. References 16
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INTRODUCTION
India is the fastest growing major economy in the world and is worth $ 2.6 trillion, as per an IMF
report of 2017. This growth has been made possible by accelerated development in the industrial
sector in the past few decades. Yet, an important sector that has contributed significantly to
industrial growth has largely remained unnoticed – the logistics sector.
The logistics sector in India is currently worth $ 160 billion and is poised for huge growth in the
near future. Yet, the sector has struggled for a long period of time due to untrained/undertrained
workforce, non-conducive government policies, lack of proper infrastructure and high levels of
inefficiency in the system. All these reasons together increase the logistics cost for India, which is
currently 13-15% of GDP.
With the implementation of GST and greater attention being accorded to the logistics sector after
receiving “infrastructure” status in November 2017, the sector is expected to reach $ 215 billion
by 2020. These policy changes are aimed at boosting the attractiveness of the sector; increasing
globalization, rise of e-commerce and mega projects like Sagarmala (port modernization, port
connectivity and port-led industrialization) and Bharatmala (83,677 km of road, 44 economic
corridors and 24 multimodal logistics parks) are also key enablers of growth in this sector.
While such policy changes and increased automation are expected to aid the growth of the Indian
logistics sector, it is predominantly a people-oriented business. Unfortunately, the skills possessed
by the blue-collar workers (drivers and warehouse operators) and administrative clerks are
below-par. The recruitment, training and retention of the labour force are crucial factors that can
have a direct impact on the performance of the logistics sector, yet they remain highly overlooked
in the current context. Another critical issue that will impede the growth of this sector is the
impending shortage of drivers. In 2016, there was a shortage of approximately 22% and going by
the trend, this number can reach almost 50% by 2022. This shortage of manpower and the dismal
focus on skilling the existing manpower contribute to the skill gaps that exist in this industry.
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Rural Logistics in India
Rural logistics include all the transport, material handling, storage, distribution and packaging
activities of goods in rural areas. The characteristics of rural logistics in India are as follows:
a) A steady inbound flow of consumer products, staples, etc
b) A steady outbound flow of industrial goods from the various Industrial Development Areas
(SEZ) established by the state government
c) Presence of small-scale unorganized logistics players
d) Increased presence of warehouses
e) Loading/unloading of goods in docks
With increased levels of production & trade, growth in organized retail and rise of e-commerce in
semi-urban and rural India, rural India has assumed significance in the logistics growth story. With
almost 70% of Indian population living in rural India, skilling of rural workforce can provide
significant advantages to improve efficiency and bring cost down in the logistics sector.
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EXECUTIVE SUMMARY
The report assesses the current situation of logistics in India and shows the growth potential this
sector possesses. Through primary research, the report highlights the various problems existing in
the skillsets of labourers and initiatives being taken by some companies. Insights from the people
working in various positions have also been captured along with their experiences and
perspectives. It also reveals what holds the youth back from aspiring for a career in logistics. The
secondary research shows how various educational institutes and government bodies are trying to
address the existing skill gaps.
The report further shows the various challenges in the logistics industry – perception issues, lower
participation in government initiatives, poorly written course curricula, etc. It also highlights the
existing skill gaps across different domains in the logistics sector.
Finally, the report concludes by recommending a multi-stakeholder approach involving the
government, companies, educational institutions and logistics associations. An integrated program
encompassing the National Apprenticeship Promotion Scheme, government bodies and a 3-month
course needs to be managed by a robust IT system to perform skilling and hiring activities. The
proposed recommendations are:
i. Education policy/curriculum development
ii. Regulatory policies
iii. Collaborative framework
iv. Standardized training
v. Government partnerships
vi. Developing coordinating bodies and ecosystem of skills
vii. Recruitment and Retention strategies
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RESEARCH & ANALYSIS
Primary Research
Technology helps streamline processes and even low skilled employees can do an effective
job. Apart from skill gap, discipline is also lacking in the industry
Lot of warehouses have started opening in tier 2 and 3 cities to meet growing demand and
want to hire local people for the same
Apart from technical skills, other important skills required for logistics industry are ethics,
safety training, software knowledge, oral communication and written skills, professional
conduct
New generation people don’t want to work as drivers because the sector is quite unorganized
Due to large cases of abuses in the logistics industry, there is a low-esteem in the blue-collar
workers
Internal training processes are strong but finding the right talent is a big challenge
Pilot skill training projects for employees are useful
- Vipin Aggarwal, Business Development, Rivigo
Most of our workers at our plant are from local regional areas and hence they haven’t
undergone any specific skill training for any production or logistics activities
As they are unskilled, we hire them on a contractual basis and these directly impact our
productivity rate, as there are new sets of contractual workers coming every month
However, keeping this in mind, we have started hiring from the local ITI and Diploma
colleges under apprenticeship scheme of the local state government
- Anubhav Jain, GKPL, Sarigam
Even the operators which are hired from Diploma and ITI courses are not technically skilled,
these shows there is need for change in curriculum for these courses
As the sector is unorganized, it leads to lower wages to the people who are working currently
in logistics
- Rajesh Thool, Production Manager, GKPL
Current logistics workforce at our plant lacks a decision making, problem solving ability on
the shop floor; they require frequent supervision from high level operator and managers
- Umesh, Manager, Lalji Mulji, Vapi
We are working under the Pradhan Mantri Kaushal Vikas Yojana to train 10000 drivers and
sensitize them about the importance of safe driving. These workshops are followed by an
evaluative test with a cut-off of 70% and the drivers are also presented with rewards (cash
and kind)
Our plant at Chakan, has converted the Mahindra KUV shop floor into an all-women
workforce to provide them employment and pride
- Seema Bhaskar, Mahindra & Mahindra
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Few major insights from the interviews of fleet operators are as follows:
1. The majority of players in transportation sector in India are small scale organizations
running as family owned businesses.
2. The workforce in rural areas are comparatively more unskilled compared to the urban
areas; hence they work at lower wages.
3. SEZ provides a major opportunity for Government and private players to effectively hire
workforce from ITI and students under apprenticeship programs.
4. Incentives and subsidy provided by government could boost the private players’
participation in skill programs and hiring directly from these courses.
5. Majority of the SMSE in semi-urban part of the country, hired the major part of logistics
workforce on contractual basis.
6. Biggest barrier to the enrolment into government skill programs (MSDE) is their inability
to link the program to employment generation opportunities.
Through our interviews of drivers, forklift operators and warehouse executives, we tried to identify
their major grievances with the logistics sector:
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Secondary Research
1. Industrial Parks in Rural Areas
Industrial Parks are mostly located in the rural or semi-rural parts of India. These Industrial Parks
under SEZ are already doing tie-ups for apprenticeship and hiring from ITI, engineering and
technical universities.
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b. Spread of Industrial Training Institutes
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CHALLENGES FOR SKILLING IN RURAL INDIA
1. According to the MSDE, there will be a requirement of additional 8.2 million skilled workers
in logistics sector in between year 2017-2022
2. E-commerce penetration is currently lower due to the major logistics challenge faced by the
companies in such regions.
3. The literacy rate in rural areas is still lower compared to the other counterparts. Hence, it poses
a major challenge for the industry while setting educational criteria for job positions.
Overall 2001 2011 Difference
India 64.8 74.0 +9.2
Rural 58.7 68.9 + 10.2
Urban 79.9 85.0 +5.1
Source - (Literacy Rate - 2011 Census)
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SKILL REQUIREMENT IN LOGISTICS INDUSTRY
The skills requirement in Logistics Industry can be divided into three components:
1. Generic Skills
1. Writing Skills
2. Reading Skills
3. Oral Communication
2. Professional Skills
1. Decision Making
2. Plan and Organize
3. Problem Solving
4. Customer Centricity
5. Analytical Skills
6. Critical Thinking Skills
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RECOMMENDATIONS
Training and Skill Development
As per World Bank classification of countries, India lies in the intermediate logistics competence
maturity level with a score of approx. 3 on a scale of 1.00 – 5.00. Alleviating the skills problem in
the logistics industry will require a multi-stakeholder approach. This could be part of a 10-year
plan, to strengthen the institutional support through inter-ministry and agency coordination in the
planning, implementation and monitoring of policies and measures affecting the industry. The
main stakeholders in this plan could be:
Government
Companies
Educational Institutions
Logistics Associations
1. Government Initiatives
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2. Company in-house Training Initiatives
a) Standardized training process: The onus lies with the companies in designing
standardized training programs with the help of external inputs and tie-ups with other
companies and training agencies.
b) Proactively tap rural as a resource pool: Rural India is a source of cheap, abundant
labour and investment and procurement of labour from the villages will be a strategic step.
For this, adequate plans and skill development workshops would be required and other
stakeholders have a role to play. But as far as the private companies are concerned, strategic
and financial push is needed.
c) Partner with the government: Companies could partner with the govt. in areas such as
awareness building, capacity creation, loan financing, and assessment leading to
certification, employment generation, CSR and competitions.
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4. Initiatives by Logistics Associations (Logistics Sector Council)
a) Set up supervising & coordinating bodies: Organizations like the NSDC should be used
to monitor & provide a thrust to the skilling initiatives. India has a demographic advantage
with the average age of its population estimated to be within 29 years of age for the next 6
years. Also, by 2022, India would have the maximum number of working age population
in the world. The Logistics Skill Council can look into utilizing the rural workforce, given
India’s demographic dividend, towards maximizing the economic output of India.
Retention of talented employees is also an equally important task for companies, where getting
talented employees is a challenge. Based on the insights gained from our primary research, the
following strategies are being recommended to retain talented manpower by the companies:
1. Employees should be shown a clear career progression path so that they can understand
how their career is going to shape in their respective vertical.
2. Continuous training should be provided to the blue-collar workers so that their skills do
not become obsolete.
3. An appealing working environment is necessary to boost the morale of the workers. This
can be done through providing air-conditioned shop floors, providing soothing music
arrangements, adorning walls with motivational quotes, etc.
4. Simple initiatives like “most efficient driver” or “employee of the month”, coupled with
awards and certifications can also go a long way in retaining employees.
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REFERENCES
1. (Deloitte, 2018)
https://www2.deloitte.com/content/dam/Deloitte/in/Documents/public-sector/in-ps-india-on-cusp-
of-a-logistics-revolution-noexp.pdf
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