Why in news?
The government has been highlighting the rapid modernisation of India’s logistics sector. New policies, infrastructure projects and digital platforms are aimed at reducing costs, improving efficiency and making India a competitive global supply‑chain hub. The topic is relevant for questions on infrastructure, economy and trade.
Background and history
Logistics – the movement of goods by road, rail, water and air – is vital for trade and industry. Historically, India’s logistics cost has been high, estimated at around 14–16 percent of GDP. Fragmented regulation, inadequate warehousing and poor coordination between modes have hindered efficiency. Since 2017 the government has embarked on a series of reforms, culminating in the National Logistics Policy 2022 and the PM Gati Shakti National Master Plan 2021 to create multimodal connectivity.
Economic importance of logistics
- Trade competitiveness: Efficient logistics lowers the cost of moving goods, making exports more competitive and reducing prices for consumers.
- Growth engine: The sector is valued at more than USD 200 billion and employs around 22 million people, offering significant opportunities for job creation.
- Regional development: Better roads, rail lines, ports and airports can stimulate industrial growth in underdeveloped regions.
- Revenue generation: Improved logistics systems attract foreign investment and increase tax revenues through enhanced trade.
Major initiatives
- National Logistics Policy 2022: Provides a framework to reduce logistics costs, standardise processes and create a digital logistics ecosystem.
- PM Gati Shakti National Master Plan 2021: Uses geospatial technology to plan and coordinate infrastructure projects across ministries, ensuring that roads, railways, ports and airports connect seamlessly.
- Dedicated Freight Corridors: The eastern and western corridors are under construction to allow high‑speed freight trains, freeing up tracks for passenger traffic and reducing transit times.
- Multimodal Logistics Parks (MMLPs): Large hubs that integrate road, rail and inland waterways with warehousing, cold storage and value‑added services.
- Unified Logistics Interface Platform (ULIP): A digital platform that brings together data from ports, shipping lines, railways and customs to provide end‑to‑end visibility.
- Logistics Data Bank: Uses RFID tags to track containers and reduce dwell time at ports.
- Maritime initiatives: The Sagarmala programme modernises ports and promotes coastal shipping, while the Maritime Amrit Kaal Vision 2047 outlines long‑term goals for India’s ports and shipping sector.
- Road and highway expansion: The Bharatmala project and expressway network are upgrading highways, while the Railways’ National Rail Plan 2030 aims to modernise rail infrastructure.
Challenges
- High logistics costs: Despite reforms, costs remain around 14 percent of GDP, higher than China’s 8 percent. This reduces competitiveness.
- Infrastructure gaps: Rural roads, last‑mile connectivity, warehousing and cold‑chain infrastructure remain inadequate in many regions.
- Regulatory fragmentation: Multiple laws, taxes and standards across states create compliance burdens and delays.
- Skill deficit: The industry suffers from a shortage of trained drivers, warehouse managers and logistics planners.
- Environmental concerns: The sector is a major source of emissions. Overreliance on road transport increases congestion and pollution.
Way forward
- Integrated infrastructure: Strengthen multimodal connectivity so that goods can move smoothly from farms and factories to ports and airports.
- Green logistics: Promote electric trucks, inland waterways, coastal shipping and rail freight to reduce carbon emissions.
- Skill development: Invest in training programmes for drivers, logisticians and warehouse staff. Encourage women’s participation.
- Digital innovation: Use artificial intelligence, blockchain and Internet of Things technologies to optimise routes, track shipments and improve transparency.
- Public–private partnerships: Encourage private investment in logistics parks, inland ports and cold chains while ensuring affordability for small businesses.
- Simplify regulations: Harmonise taxes and standards across states and provide single-window clearance for logistics players.
Transforming logistics is vital for India’s ambition to become a manufacturing hub. Success will depend on integrating infrastructure, embracing technology and building an inclusive workforce.