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India’s logistics sector big opportunity for investors

  • Category
    Economy
  • Published
    17th Nov, 2022

Context

The industrial and logistic asset class is attracting large investments and is expected to outperform other real estate and Infrastructure asset classes.

About

Current status of India’s Logistics Sector:

  • India’s logistics sector accounts for about 4% of the GDP.
  • The unorganized sector amounts to over 90% of the logistics sector.
  • The average logistics cost per GDP among BRICS countries was11%, but it was 14% in the case of India.

What is National Logistics Policy (NLP) 2022?

Goals set by the National Logistics Policy:

  • To raise India’s ranking in the Logistics Performance Index to 25.
  • To bring down the logistics cost from 14% to 8% of GDP.
  • To create data-driven Decision Support Systems (DSS) to enable an efficient logistics ecosystem.
  • To ensure that logistical issues are minimized
  • Exports to grow manifold
  • The policy focuses on key areas such as process re-engineering, digitization, and multi-modal transport.
  • It is a crucial move as high logistics cost impacts the competitiveness of domestic goods in the international market.
  • The need for a national logistics policy was felt since the logistics cost in India is high as compared to other developed economies.

Factors working in India’s Favour:

  • Progress of ‘Make in India’
  • ‘China plus one strategy’ of most global manufacturers
  • Huge demand for grade-A industrial and logistic parks in our country

Significance:

  • This would guarantee the logistics industry acts as a growth engine and a major factor in upgrading India to a USD 5 trillion economy.
  • PM Gati Shakti will get a further boost and complementarity with the launch of the National Logistics Policy.
  • The Policy will help make the sector an integrated, cost-efficient, resilient, and sustainable logistics ecosystem in the country as it covers all bases of the sector along with streamlining rules and addressing supply-side constraints.

Other Related Initiatives to Logistics:

  • Multi-Modal Logistics Parks
  • Logistics Ease Across Different States (LEADS) Report
  • Dedicated Freight Corridor
  • Sagarmala Projects
  • Bharatmala Project
  • Multimodal Transportation of Goods Act, 1993.
  • PM Gati Shakti Scheme
  • The policy is an endeavor to improve the competitiveness of Indian goods, enhance economic growth and increase employment opportunities.

Government Initiatives:

  • Logistics Master Plan: This initiative takes a geographical strategy as opposed to an industry approach. Several projects and activities will be integrated into the plan to expand the mix of intermodal and/or multimodal transportation.
  • National Multimodal Facilities and Warehousing: To promote intermodal and Multimodal Logistics Parks (MMLPs) as a separate class of infrastructure, the National Grid of Logistics Parks and Terminals is being planned.
  • National Logistics Workforce Strategy: For the integrated skill development of professionals in the logistics sector, the government is developing a national logistics workforce strategy.
  • National Logistics Law: A national logistics law has been drafted and is under consultation. A unified legal framework for the paradigm of One Nation, One Contract, would support the One Nation, One Market objective and provide a flexible regulatory environment (single bill of lading across modes).
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