High on the 2024 Manifesto - Logistics Transformation and economic growth
India has always been central to global trade, right from ancient times, however we seemed to have lost that spot as the global trade underwent sea change, right from routes, to modes, to even infrastructure development.
In the past few years, India seems to be catching up, and the future looks bright. The Indian Freight and Logistics Market size is estimated at USD 317.26 billion in 2024, and is expected to reach USD 484.43 billion by 2029, (CAGR growth of 8.83%). There is a push at the government level as well, as it recognises the crucial role that logistics plays in growing the ‘manufacturing sector’ and country’s GDP as a whole. We have seen a multi-level push in terms of infrastructure development, policy changes and even resource skilling in the last few years.
India's logistics sector has emerged as a critical pillar of the nation's economic growth. With this being the election year in India, let us look at the logistics sector growth till now and what can we expect in the future. As India dreams of being the third largest economy in the world, it is crucial that the logistics sector is transformed and poised for growth.
Let's delve into the key drivers propelling India's logistics revolution. Government Initiatives The government has to play a pivotal role in fostering the growth of the logistics sector. The first step in overhauling the logistics sector was building robust infrastructure, and the government has made substantial investments in the following areas:
Improving Road connectivity and Modernizing Ports and Railways
Greater allocation to modernising the railways and the ports have significantly improved the cargo handling capacity, reduced turnaround time and improved efficiency. The interim budget 2024-25 allocated ‘Rs 2.55 lakh crore to the Indian Railways’, a 5.8% increase over the previous year.
Sagarmala, another ambitious initiative to improve the maritime industry and infrastructure of our country has received an ‘allocation of Rs. 700 crore’ in the recent interim budget.
Similarly, has received an allocation of 2.7 lakh crore, an increase of 30%. Put together, this adds to the grand Gati- Shakti plan which aims to boost the economic growth and bring in sustainable development through enhanced infrastructure, including roads, railways, airports, ports, mass transport, waterways, and logistics.
Development of Multimodal Logistics Parks (MMLPs)
The MMLPs provide integrated facilities for transportation, warehousing, and value-added services, streamlining supply chains, and reducing logistics costs. ‘35 MMLP’s’ will be developed in the first phase of Bharatmala.
National Highways Development Project (NHDP)
This ambitious project has dramatically enhanced India's road network, facilitating faster and more reliable freight movement across the country.
Financial Support
Various financial incentives and schemes have been introduced to support logistics companies, including subsidies for setting up warehouses and cold storage facilities. Policy Changes and Digitizing Logistics
GST implementation and E-Way Bill system
Implementation and execution of GST has impacted the logistics industry in a big way as it has simplified the tax system in India, thereby reducing delays at state borders, improving the flow of goods, and creating a more integrated national market. Similarly, moving away from the legacy paper pen era and introducing the electronic way bill system has streamlined the movement of goods, reduced documentation, and curbed tax evasions.
Logistics Efficiency Enhancement Program (LEEP)
The LEEP aims to improve coordination between different agencies involved in logistics, promote the adoption of technology, and enhance the skill levels of the workforce.
The National Logistics Policy
‘The National Logistics Policy’ aims to create a cost-efficient, resilient, and trusted logistics ecosystem for accelerated and inclusive growth. It aspires to reduce the cost of logistics in India to be comparable to global benchmarks by 2030, aiming to rank among the top 25 countries in the Logistics Performance Index. The policy will be implemented through a Comprehensive Logistics Action Plan (CLAP), focusing on integrated digital logistics systems, standardization, human resources development, and facilitation of logistics parks development.
ULIP - Unified Logistics Interface Platform
As part of the National Logistics Policy, the Unified Logistics Interface Platform (ULIP) has been developed. This integrated portal allows for real-time tracking of goods' location, significantly easing the process and enhancing logistics efficiency. The ULIP represents a step forward in using technology and innovation to improve the logistics sector's efficiency and reliability.
Future Trends
India's logistics sector is poised for a transformative leap and the emphasis on digitalization and infrastructure enhancement only underscores a strategic shift towards efficiency and reduced logistics costs. These changes aim to streamline operations, enhance connectivity, and foster a more integrated logistics ecosystem.
As we look to the future, the logistics landscape in India is expected to become more dynamic and efficient. The revamping of policies and investing in infrastructure is a testament to the potential of logistics as a cornerstone of economic growth. Greater strides in digitalization and upskilling of manpower to make logistics a robust and top notch service, is necessary in the coming years to keep the momentum going for the sector.
The current transformation is the result of a confluence of factors, including proactive government initiatives, far-reaching policy changes, and the evolving economic and geopolitical landscape. The government needs to continue having a strong focus on the logistics sector to keep the momentum to ensure we turn the developed economy dream into reality.