India Logistics Movement

Syllabus: Economics

Source:  TH

Context: India’s logistics sector is transforming with initiatives like the National Logistics Policy and PM Gati Shakti to cut costs, boost efficiency, and enhance connectivity. Contributing 14% to GDP, it is pivotal to the $5 trillion economy goal.

Logistics Movement Data in India:

• Logistics Cost Reduction: Declined by 0.8-0.9 percentage points of GDP between FY14-FY22.
• Sector Contribution: Logistics contributes 14% to India’s GDP and is valued at $250 billion.
• Transportation Efficiency: Average truck travel distance increased from 225 km to 300-325 km due to GST implementation.
• Bilateral Trade Facilitation: Unified Logistics Interface Platform (ULIP) has processed 382 use cases for automation and trade facilitation.
• Rail vs. Road Share: Road accounts for 66% of freight, rail 31%, waterways 3%, and air 1%.

Modes of Logistics Movements in India:

• Road: Largest contributor, with 66% share; key for short-haul and last-mile delivery.
• Rail: 31% share, suited for bulk goods and long-haul transportation; expanding with dedicated freight corridors.
• Waterways: 3% share; cost-effective for heavy goods; potential for coastal and inland navigation.
• Air: 1% share; critical for high-value, time-sensitive goods.

Importance of a Strong Supply Chain:

• Cost Reduction: Efficient logistics reduce production costs and improve profitability.
• Global Competitiveness: Enhances India’s export potential and competitiveness in global markets.
• Economic Growth: Drives investment and supports MSMEs by reducing inefficiencies.
• Sustainability: Promotes eco-friendly practices like rail and waterway usage, reducing emissions.
• Employment: Generates jobs across transportation, warehousing, and technology sectors.

2024 Recent Government Initiatives:

• PM Gati Shakti: Multi-modal integration of transportation infrastructure for seamless connectivity.
• ULIP: Facilitating data-driven logistics through process digitization and automation.
• NLP Marine Policy: Boosts port logistics and coastal shipping efficiency.
• Capital Expenditure: 11.1% rise in infrastructure spending to support logistics networks.
• FAME II Scheme: Promoting electric vehicles for clean logistics.

Challenges Faced by Logistics Movement:

• High Costs: Logistics costs remain at 14% of GDP, higher than the global average.
• Infrastructure Gaps: Limited last-mile connectivity and inadequate warehousing facilities.
• Modal Imbalance: Over-dependence on road transport, underutilization of rail and waterways.
• Skilling Deficiency: Lack of trained workforce for advanced logistics management.
• Environmental Concerns: High emissions from diesel-powered trucks and poor fuel efficiency.

Way Ahead:

• Modal Diversification: Increase rail and waterway share through investments in infrastructure.
• Technology Adoption: Expand digital platforms like ULIP for efficient operations and tracking.
• Sustainable Practices: Promote electric vehicles and alternative fuels.
• Policy Alignment: Streamline regulations and ensure implementation of logistics-focused policies.
• Skill Development: Invest in training programs to enhance workforce capabilities.

Conclusion:

India’s logistics sector is on a transformative journey, driven by robust policies and investments. With continuous advancements in technology, infrastructure, and sustainable practices, the sector is poised to be a cornerstone in India’s economic aspirations.

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