India’s logistics system

Why in news?

India’s logistics and connectivity infrastructure struggles to keep pace with the country’s needs, creating a drag on competitiveness and growth prospects.

Why is logistics sector important?

• It is a differentiating sector that can largely affect any country’s exports, thereby adding a significant competitive edge, with the underlying assumption of a robust logistics sector.
• The logistics industry comprises all supply chain activities, mainly transportation, inventory management, flow of information and customer service.
• It determines the success of not only the country’s supply chain but also influences it on a global scale.

What is the status of India’s logistics sector?

• India’s logistics are estimated to account for about 14.4% of GDP and more than 22 million people rely on it for their income.
• The Department of Commerce's logistics division for India is given the responsibility for the Integrated Development of Logistics Sector.
• The Special Secretary to the Government of India is responsible for the development of an action plan to facilitate the overall development of the logistics sector.
• State-wise rankings of logistics sector in India:

To know more about India’s logistics sector.

What is government’s role towards the development of the logistics sector?

• National Logistics Policy – The objective of the policy is to boost the nation's economy and corporate competitiveness by establishing an integrated, sustainable and cost-efficient logistics network.
• The policy aims to reduce the logistics cost, which stands at 14% of GDP to 9-10%.
• National Logistics Law – The law's provisions will make it possible to assign a distinct logistics account number in place of cumbersome registration processes.
• Logistics Master Plan – An Inter-Ministerial Committee will be used to supervise the master plan's execution.
• State wise local logistics strategies will be created in coordination and cooperation with the federal plans.
• National Multimodal Facilities and Warehousing – The standards for the National Logistics Platform (iLOG) are currently being finalised in conjunction with the Ministry of Electronics and Information Technology (MEiTY).
• The iLOG will work to integrate a single platform for the various IT solutions that have been developed by various stakeholders, including logistics service providers.
• National Logistics Workforce Strategy – The approaches include introduction of a Certified Logistics Professional (CLP) scheme, and to incentivise the engagement of such professionals.
• The Driver Employment and Empowerment Programme is one of the strategies, and it aims to lower logistics costs by making truck driving a desired career due to the severe scarcity of truck drivers.
• PM Gati Shakti National Master Plan – The Union Budget 2023 doubled the funding of the plan and has announced an outlay of ₹2.4 lakh crore for the Indian Railways.
• Railways offer an economic mode of logistics movement given their pan-India network, which can play an important role in enabling a coordinated and integrated logistics system.

Why railways is vital in improving India’s logistics?

• Convenience over cost – Freight movement cost is the highest in the road sector, nearly twice the rail cost.
• However, the convenience of road transport has taken precedence over cost, and the railways in India have been losing freight share to other more flexible modes.
• Rise in container traffic – The convenience of moving non-bulk commodities has led to an increase in containerised traffic over the last decade.

Non Bulk cargo is commodity cargo that is transported unpackaged in large quantities.

• It has grown from 7.6 million Twenty-foot Equivalent Units (TEU) in 2008 to 16.2 million TEUs in 2020.

TEU is a unit of cargo capacity.

• China – China uses special trains to carry containers that connect significant ports to the inland, and has dedicated rail lines to move container traffic and planned double-decker container carriages for greater efficiency.

What is the way forward?

• By focusing on the digital aspect, the government’s aim is to upgrade the existing system will lead to faster, better communication with fewer errors and will benefit the sector significantly.
• An integrated logistics infrastructure with first and last-mile connectivity is essential to make rail movement competitive with roads.
• Such a move will facilitate exports by rail to neighbouring countries such as Nepal and Bangladesh.
• Increased adoption of the railways for cargo movement is crucial to improve the country’s logistics competitiveness.

Reference

1. The Hindu │India’s logistics system