India’s Logistics Revolution: Benefits and Challenges of Multimodal Logistics Parks.

India's logistics sector is witnessing rapid growth and establishing itself as a key player in the global supply chain network.

As per World Back Logistics Report India ranked 38th out of 139 countries in the Logistics Performance Index (LPI) of 2024. Despite this impressive growth, India’s logistics sector still faces several challenges, such as high logistics costs, inadequate infrastructure and fragmented supply chains.

To overcome these challenges and strengthen India’s logistics landscape, the Indian government has planned the development of 35 multimodal logistics parks (MMLPs) across the country. These parks aim to integrate multiple modes of transport and focus on streamlining the logistics process for greater efficiency and cost-effectiveness.

Why are multimodal logistics parks necessary for India? What are the benefits and challenges associated with their successful implementation? Read on to learn more.

Multimodal Logistics Parks: Overview and Current Status

Multimodal logistics parks (MMLPs) are large-scale facilities that integrate various transportation modes (road, rail, air, and sea) into a single hub. This initiative is spearheaded by the National Highways Logistics Management Limited under the Ministry of Road Transport and Highways (MoRTH) and the National Highways Authority of India (NHAI).  

India’s first MMLP is being developed in Jogighopa, Assam and will serve as a key logistics hub for the northeastern region and neighboring countries. It spans over 317 acres and will provide integrated warehousing, cold storage and value-added services.  The estimated cost for this project is 693.97 crore and currently, it is in an advanced stage of construction.

Under the Bharatmala Pariyojana project, the Indian government plans to establish 35 MMLPs across the country. These parks are strategically located near major industrial hubs, ports and highways and aim to enhance connectivity and streamline the movement of goods.

Here is a list of upcoming logistics parks in India as of 2023-2024, along with details on their area and services offered:

  ⦁ Chennai Multi-Modal Logistics Park (MMLP)

  ⦁ Bangalore Multi-Modal Logistics Park (MMLP)

  ⦁ Nagpur Multi-Modal Logistics Park (MMLP)

  ⦁ Indore Multi-Modal Logistics Park (MMLP)

  ⦁ Visakhapatnam Multi-Modal Logistics Park (MMLP)

The Need for Multimodal Parks and Their Role in Achieving India's $5 Trillion Economy Goal

India's Finance Minister, Nirmala Sitharaman, projects that the country is on track to becoming a $5 trillion economy and is expected to become the world's third-largest economy by 2028. However, achieving this goal requires significant improvements in logistics.

Currently, India’s logistics costs account for about 14% of GDP which is much higher than the global average of 8-10%. Moreover, overdependence on road transport, insufficient fleet mix and regulatory hurdles, like intricate paperwork and processes for toll collections are other factors that negatively impact logistics costs in India.

Multimodal logistics parks (MMLPs) can play a crucial role in addressing these issues by offering lowered logistics costs and improved transport efficiency. Ultimately, MMLPs can boost global competitiveness and help achieve the country's $5 trillion economy target.

Advantages of Multimodal Logistics Parks

Cost Reduction

By integrating multiple transport modes, MMLPs can lower transportation costs and reduce transit times. According to a Center for Transportation and Logistics report, MMLPs can reduce logistics costs by up to 10%.

Improved Connectivity

These parks enhance regional connectivity by linking various transport modes and enable smoother and faster movement of goods across the country.

Advanced Storage Solutions

MMLPs offer state-of-the-art warehousing and cold storage facilities, which are essential for industries like agriculture, pharmaceuticals and retail.

Environmental Benefits

By optimizing transportation routes and shifting cargo to more efficient modes like rail and waterways, MMLPs help reduce carbon emissions and fuel consumption.

Value added services

MMLPs also offer value-added services like customs clearance and warehouse management which help lower logistics costs and improve overall efficiency.

Conclusion

In conclusion, the development of multimodal logistics parks is a transformative step toward modernizing India’s logistics sector. However, successful collaboration between the public and private sector is crucial to overcome existing challenges. With continued support and strategic development, MMLPs can drive economic growth and help the country achieve its $5 trillion economy goal.