India’s logistics sector big opportunity for investors
- Category
Economy
- Published
17th Nov, 2022
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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
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- 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
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- 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).