Logistics will act as India’s industrial backbone but the dearth of skilled labour requires immediate steps to remedy the skill-manpower mismatch.
Lionel Alva
In the Indian context, logistics as an industry has only come to the fore in recent times. The advent of e-commerce and the foray of 3PLs have placed significant emphasis upon globally competitive supply chains. With the supply chain expected to become more sophisticated there has been a sporadic increase in the need for skilled labour. The logistics sector is expected to receive further impetus with an influx of good investments, better regulatory practices, mega-infrastructure projects among other drivers. Furthermore, the country’s burgeoning e-commerce sector has placed significant emphasis on technology, operations, processes and delivery. With delivery cycles becoming shorter, the supply chain too is required to be precise and accurate in terms of its operations and service quality. And while India espouses ambitions of being a manufacturing hub, its logistics cost as a percentage of GDP is unusually high vis-à-vis that of developed countries. The lack of skilled labour has only added to the country’s logistics woes. There is a dire need to change social perceptions when it comes to logistics. “The logistic sector does not enjoy social acceptances. This relates to the youth not being attracted to this sector. It is important for logistic industry and government to make the people at large aware of the importance of the sector and job opportunities possible. This can be done by a media campaign as well as road shows in schools and colleges. Logistics is not bound by a region and hence the exercise should be pan India,” asserts Samir J Shah, chairman, FFFAI. With supply chains evolving and more technological innovations coming to the fore there has been much greater dependence on highly skilled logistics personnel which there is a serious dearth of. The proper balance of man and machine is integral to a highly efficacious logistics network. Ramanujam, CEO, Logistics Sector Skill Council, highlights, “The logistics sector in India has not had the benefit of any structured training for the entry level work force. All training has been ‘on-job’ resulting in inefficiencies. Even at the middle management it is only off late that a handful of institutes have commenced training on topics such as freight forwarding, supply chain, warehouse and container yard management, etc. An untrained workforce also results in higher logistic costs. Thus the training of personnel in logistic functions cannot be ignored any longer.” The logistics sector, at present is highly unorganised, leading to high level of complexity in supply chains, unskilled labour, undefined roles, and absence of process-driven systems. Despite the increasing adoption of technology with automation becoming increasingly prevalent, the sector remains a skill driven industry. According to a recent KPMG report on skilling India, the average age of its population is estimated to be within 29 years for the next 6 years - this gives an envious edge over other nations. It is also estimated that by 2022, India will have the maximum number of working age population in the world (population between the ages 15 to 59) who could contribute to the economic growth of the nation. “A perfect combination of labour and technology is the ideal driver for logistic industry. Optimising the skills of the labour, we can make a positive change of up to 12 percent in the bottomline. In the Indian context, skilled labour is a critical element as the industry itself is still evolving,” says Arif Patel, vice chairman, Patel Integrated Logistics. Furthermore, with India’s plans of becoming a manufacturing hub, there has been a great degree of focus on the logistics sector and the government has taken steps to remedy the neglect that the country’s logistics sector has faced. This over-dependence on high-cost logistics is increasing the cost load on Indian manufacturers and impacting India's future as a manufacturing hub. Rajiv Pratap Rudy, India’s union minister of state for skill development and entrepreneurship, observes, “For the first time we are able to define the eco-system for skills. The first mission is that skilling should be a part of the education system from the very inception. We are talking about the entry level where the challenge is to train nearly 300 million people and there is a need for a funding of rupees six lakh crores. To achieve this goal we have the national skills qualification framework.” This is a highly pertinent observation as there is a tremendous skill manpower mismatch in India. While education has been focused on, skill has not, so much so that the skilled manpower in India is a mere 3 percent of its overall workforce. In stark contrast, a country like Japan has 80 percent of workforce being skilled. This mismatch is perhaps owing to the fact that the country’s education system has had a distinct bias towards skill. Rudy adds, “We will not ‘Make in India’ unless we have makers in India. This is a gap that no one talks about. Since India has never had a conscious aspiration towards skill. We all believe in 12 years of school. However, add a mere 10 weeks of skill training to it and an individual becomes employable.” On its part, the government has been stressing on setting up multi skilling centres and training schools for commercial vehicle drivers in rural areas. This will pave the way for the youth to become multi skilled and enable them to take up employment in the small medium enterprises. trained commercial vehicle drivers especially for the HMV segment will fill a much needed skill gap. Being that e-commerce has the most demand in Tier II/III towns and e-commerce is an employment of choice for many rural youth even in the metros these programmes are expected to benefit the youth. The government has depicted its concern for rural skill development and subsequent employment. It has initiated several programmes to foster skilling in rural areas; the Deen Dayal Upadhyay Grameen Kaushal Yojana is a focused programme to skill rural youth. Targeted beneficiaries are well identified and documented thereby making mobilisation relatively well structured. The KPMG report on skilling highlights statistics from the 12 Plan Document of the Planning Commission where it depicts that as much as 85 percent of the labour force in India has an educational qualification of up to secondary level within which 55 percent have an educational qualification of up to only the primary level with a mere 2 percent of its workforce with any vocational training. The government along with other agencies has endeavoured to incentivise the students to enroll in higher education and vocational training with an increasing demand for skilled labour. According to Shah, there are still barriers to skilling that makes it difficult for potential candidates to benefit from these initiatives. There is a dire need for skilling to be a necessity at the educational level. He finds, “There are numerous state and central government initiatives which are useful both for the training institute as well as potential trainees. However, the process of taking benefit is very cumbersome and difficult as a result of which benefit cannot be availed is simpler and trusting model needs to be adopted. With the proposed GST and industrialisation along Delhi Mumbai Industrial Corridor, the need for working personnel in rural areas increases. A simpler model will make it more useful and beneficial to everybody.”