Subscribe to never miss an important update!

  • Context (TH): According to a report by the National Council for Applied Economic Research, logistics cost in India has reduced to 7.8%-8.9% of GDP.

Logistics Sector in India: Status

  • Valued around US$ 200 Billion, it contributes 15% to India’s GDP.
  • The sector grows at a CAGR of 7-8% since past five years; it is expected to grow at 10.5%.
  • 70% of India’s logistics sector remains unorganized.
  • Employment potential: Provide employment to >22 million people.
  • Leveraging the sector would lead to a decrease of 10% indirect logistics cost facilitating growth of 5-8% in exports.

Challenges of Logistics Sector

  • High logistics cost (14% of GDP) vis-à-vis global counterparts (Germany – 8%, USA – 9%, Europe – 10%, Japan – 11%) detrimentally affecting domestic and global competitiveness.
  • Poor storage & handling infrastructure: Fragmented warehousing (constituting 10% of logistics costs), insufficient cold storages, and the absence of large integrated logistics parks.
  • Inauspicious modal mix: Despite road transport being the most expensive (>60% in India), railways, waterways, and inland water transport remain underutilized.
  • Complex tax regimes, administrative delays, and custom clearance impediments: Diverse taxation, multiple regulatory bodies, and policy intricacies hindering development.
  • Absence of seamless modal connections: The development of India’s logistics and transport sectors in isolation impedes the smooth movement across land, sea, and air.
  • Prolonged turnaround time for ships (approximately 2.2 days vs. the global average of 0.97 days) and last-mile delivery challenges contributing to transit delays.
  • Unorganized sector: Over 70% of the logistics sector is small & unorganized, characterized by poor skill levels and inadequate training.

Way Forward

  • Encourage seamless integration of various modes of transport, such as road, rail, air, and water, to create a robust multimodal logistics network.
  • Continuously review and update policies to create a conducive environment for the logistics sector’s growth.
  • Encourage private investment in warehousing, cold storage, and last-mile delivery networks.
  • Integrate sustainable and eco-friendly practices in logistics operations, such as the use of electric vehicles and green packaging.
  • Utilize data analytics for demand forecasting, route optimization, and inventory management to enhance overall efficiency.
Sharing is Caring !!

Newsletter Updates

Subscribe to our newsletter and never miss an important update!

Assured Discounts on our New Products!

Leave a Reply

Your email address will not be published. Required fields are marked *

Newsletter

Never miss an important update!