India’s Logistics Sector

About

• The Indian economy is doing well with India’s improvement in major sectors and supply chains. 
• Logistics plays an important role as an enabler for trade, manufacturing and services.
• According to the ranking of LPI, India has improved by 6 ranks and become 38th in the world in 2023, as compared to 2018. It aims to be one of the 25 best in the world by 2030 and have logistics expenditure below 10% of GDP.

Advantages of Efficient Logistics Infrastructure

• Supply chain efficiency: In the supply chain, cost efficiency keeps the delays and the lead time reduced, which makes logistics an efficient and streamlined supply chain.
  • This efficiency is essential for businesses to be able to satisfy the demands of their consumers in a timely fashion and optimise the production processes.
• Connectivity and accessibility: Logistics networks improve connectivity and accessibility between regions and markets.
  • It is economic integration and is designed to connect businesses with a larger customer base, thus encouraging trading between States and Regions.
• Reduction in cost and competitiveness: The efficient logistics operations lead to the reduction of transportation, storage and distribution costs and boost competitiveness.
  • This further improves the competitive edge of the business because they are able to put their products into the market at competitive prices.
• Job creation: Logistics is a key industry requiring multiple jobs in the sectors of transport, warehousing, distribution and related services. Job creation is one route towards income generation and economic empowerment.
• Technology adoption: Adopting technology like GPS tracking, RFID and other advanced analytics enables the industry to become more efficient in operations, lower costs and in general more productive.
• Logistics development: Logistics development has significance in economic integration, because it helps to connect various economic zones, and allows goods and services to circulate.

Challenges

• High logistics cost: India’s logistics cost is higher compared to the international logistics cost, with a high dependency on road transport leading to high levels of fuel consumption and operational costs.
• Lack of fragmentation: In India, there is no organised sector in logistics service providers, so there are inefficiencies or delays.
• Infrastructure-related challenges like clogged ports, poor last-mile connectivity and inadequate warehousing infrastructure remain.
• Lack of technology and skills: In logistics, there are gaps in the use of digital technologies, such as tracking and automation, and there is a lack of skilled workers.
• Environmental issues: The logistics rely heavily on diesel and alternative green and electric transport is somewhat limited.

Several strategies by Governments 

• Logistics sector reforms: India’s logistics sector is moving forward and taking several strides to enhance the sector and reduce delays, such as the Goods and Services Tax (GST) and the recognition of logistics service providers as infrastructure providers.
  • The major development here is that of Dedicated Freight Corridors (DFCs) to enhance the speed and the reliability of freight movement as these trains are meant to connect key cities such as Delhi, Mumbai, Chennai and Howrah.
• Multi-Modal Logistics Parks: India is building Multi-Modal Logistics Parks (MMLPs) to improve the logistics of goods. MMLPs are using various modes of transport, including road, rail and air, while also utilising modern logistics facilities like warehouses or cold storage and customs clearance centres. 
  • The Parivahan portal, along with SARATHI and VAHAN, is the digital solution in driving licence and vehicle registration services.
  • It is integrated with the ‘mParivahan’ application to ease the transportation administration, and makes the logistics operations more efficient by providing easy and single window access to important documents and services.
• Introduction of e-way bill in GST: To drive transparency in the transportation of goods and reduce paperwork, e-Way Bill is an electronic document that will be received by the transporters of goods with a value exceeding ₹ 50,000. Facilitating compliance and logistics across the country.
• GatiShakti: PM GatiShakti (2021) is the nationwide initiative for optimising the logistics infrastructure and cutting down cost by planning it in an integrated manner by multiple agencies. It causes multi-modal connectivity, projects to be realised rapidly and minimises delays due to a National Master Plan of investment in infrastructure: Economic development and job creation follow.
• National Logistics Policy: The National Logistics Policy (2022) is designed to enhance the efficiency of the logistics sector, which involves establishing a unified and integrated logistics system, such as a single window e-logistics platform, and increasing the competitiveness of MSMEs and decreasing logistics costs as a percentage of GDP.
• Initiative of Logistics Efficiency Enhancement Programme (LEEP): LEEP is a programme which aims to provide greater efficiency in freight transport by reducing transport time and the costs of transport, and by improving logistics practices through more efficient infrastructure, technology and tracking.
  • Maritime Amrit Kaal Vision 2047 aims to create a revolution in the maritime sector of the country by improving the port facilities, digitising port sectors, promoting Green initiatives and promoting the development of the shipbuilding industry, tourism and skills development. 
• Unified Logistics Interface Platform (ULIP): A digitised and integrated logistics interface platform – improves transparency and effectiveness in the integration of data from various government ministries and departments. 
  • The Indian Logistics industry has observed the positive impact of Goods and Services Tax for making the goods movement simple, lessening inter-state check-points, simplifying tax rate, and improving logistics efficiency by over 33% to usher in logistics productivity in the country.
• LEADS: Ministry of Commerce and Industry, Government of India, an annual report, measures the logistics performance of States and Union territories on three parameters – Infrastructure, Services, Regulatory Environment and Sustainability and provides inputs to policy framing and investments.

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