The growth of the logistics industry, in particular the supply chain management, is one of the main aspects of India’s development. Unfortunately, attention has mostly been skewed in favor of urban logistics over rural logistics. This can be attributed to a number of factors including population density, inequality of wealth, and the availability and quality of services such as communication, healthcare, and education
Yet, the juxtaposition of rapid globalization with the traditional mindset that still prevails in a huge part of the country, has created a unique customer base. Apart from that, there has been a rise in international and domestic demand for agricultural produce and traditional handicrafts. This has helped raise awareness about the importance of rural logistics.
The advantages of building an efficient supply chain across the country would be numerous, from boosting connectivity to reducing poverty in rural areas.
In this blog, we take a look at the issues faced by urban and rural logistics, potential improvements to the sector, and the advantages of developing rural to urban logistics.
Urban and Rural Logistics: An Overview of the Market
The logistics industry has always been a vital link between urban and rural areas. Over 65% of India’s population, a staggering 890 million people, lives in rural India. The two main industries that compose the Indian rural market are the agricultural sector and the artisans industry.
Indian rural industries:
The agricultural sector in India is currently valued at Rs. 63,506 billion. Agriculture plays a vital role in the economy, from being the main source of employment to over 60% of the population to contributing to about 17% to the total GDP.
The second largest rural industry is handicrafts. It is a distinctive segment of the Indian economy, providing employment to over six million artisans. Traditional Indian handicrafts are coveted across the world, with the US and Europe receiving over 65% of the handicraft exports.
With the mechanization of processes, farmer subsidies, global demand, and government initiatives, the sectors should be booming. Yet, the rural supply chain suffers from multiple inefficiencies that lead to a supply-demand gap:
Infrastructure:
Several parts of the country remain inaccessible due to an undeveloped road network. This, along with the lack of necessary infrastructure between factories, storage areas, and delivery points, make it extremely difficult to plan out efficient routes or regular transportation. This increases distribution time, costs, and wastage of produce.
Organizational relationships:
It is becoming the norm to partner with vendors and carriers to ensure efficiency of the supply chain. However, in India, the markets are informal and disorganized, not connected to national or international markets. This leads to lack of awareness and knowledge about the details of the products, causing stagnation of the industries.
Middle-men:
Most rural dwellers in India are forced to depend on middle-men due to lack of market linkages. The common practice of middle-men is to buy products at an extremely low rate and resell them at multiples of the price, causing the farmers and artisans to invariably lose out.
Modern technology and communication:
Current trends in logistics, such as real-time tracking and blockchain technology, have not yet entered several parts of rural India. Even regular internet and connectivity is patchy, causing a gap between what should happen and what actually takes place.
Improving Rural To Urban Logistics
In India, coordinated development between urban and rural logistics could be the key to removing the economic and social chasm that exists between the areas, achieving a reasonable allocation of resources, promoting responsible urbanization, and integrating urban-rural development.
Some current and potential ways of improving rural to urban logistics include:
Leveraging underutilized Assets:
Leveraging underutilized assets such as rural stores, department stores, and boutiques to develop a last-mile, entrepreneurial-led network.
Reverse logistics:
Gridding the country into equal parts and creating optimal routes for connecting the areas under each grid. Small and medium scale industries, such as farmers and artisans, are largely disconnected to the mainline markets. Current technology and ecommerce portals can be utilized to immediately bridge the gap between rural sectors and the consumers at a fair cost to all involved.
Rural distribution ecosystem:
Creation of a rural distribution ecosystem comprising a technology platform, daily route vehicles, and strong entrepreneur network. This will help improve access between rural and urban areas, including last-mile connectivity, introduce modern technology and infrastructure to the current supply chain, and assist in upskilling and providing employment to the rural areas.
Advantages of improving Rural to Urban Logistics
Millions of people stand to benefit from improving rural to urban logistics. Some of the main benefits include:
Reducing waste:
According to reports, the losses due to agricultural waste is Rs. 92, 651 crores. This staggering amount can be reduced exponentially with just a bit of effort.
Increasing rural tourism:
India is a unique country in terms of variety, culture, and biodiversity. Improving logistics will result in opening out the areas to tourism and increase employment opportunities.
Improving healthcare and resilience against natural disasters:
Currently several parts of India are still inaccessible, which poses a huge problem in terms of healthcare and humanitarian aid. Developing rural infrastructure will allow improvement in health supply chains and transportation of basic goods during a disaster, potentially saving millions of lives.
Increasing education and overall satisfaction:
Providing education and upskilling opportunities to farmers and artisans will allow them to make informed decisions about their products and be aware of their rights. Improving rural logistics will allow producers to reap what they sow, increasing overall satisfaction
At H&S, our main aim is making a difference in the livelihoods of workers and micro-entrepreneurs across rural India through introducing modern technology in the supply chain and providing upskilling opportunities. We believe that everyone must be appreciated and properly compensated for their efforts in order for real development to occur.