India’s logistics sector saw transformative strides in 2024, with a focus on reducing costs and achieving efficiency as envisioned by the National Logistics Policy (NLP) and related government initiatives.
Elevating Performance Through Policy and Reform
The year 2024 highlighted India’s commitment to bolstering its logistics sector, following its rise to the 38th position among 139 nations in the 2023 World Bank Logistics Performance Index. The focus shifted to reducing logistics costs, currently at 10-14% of GDP.
Key government initiatives driving this transformation include the PM Gati Shakti National Master Plan, Unified Logistics Interface Platform (ULIP), and digital reforms like the Logistics Data Bank. These efforts aim to streamline operations and enhance cross-sector connectivity.
Key Achievements in 2024
- Railway Electrification:
Electrification of short railway lines connecting yards to inland container depots improved wagon efficiency and accelerated cargo movement. - Unified Logistics Interface Platform (ULIP):
Over 614 entities registered on ULIP, with 382 use cases submitted by 142 companies. Applications focusing on cross-border trade, last-mile delivery, and reverse logistics went live to optimize operations. - Goods and Services Tax (GST):
The GST regime reduced truck waiting times by 30%, increasing daily trucking distances from 225 km to 300-325 km, and cutting logistics costs significantly. - NLP Marine Policy:
The launch of this policy enhanced port-related logistics, with platforms like Sagar Sethu and Sagar Ankalan improving maritime infrastructure and monitoring.
Sector Growth and Challenges
According to the Economic Survey 2023-24, logistics costs decreased by 0.8-0.9 percentage points of GDP between FY14 and FY22, reflecting significant state-level advancements.
Expert Insights:
- Rampraveen Swaminathan, CEO of Mahindra Logistics, emphasized transformative changes in the sector driven by digitization, risk management, and government-led initiatives. He highlighted the sector’s critical role in positioning India as a global supply chain player.
- Mahesh Fogla, Executive Director of Patel Integrated Logistics, pointed to the sector’s 12% annual growth rate, increasing domestic consumption, and job creation facilitated by skilling initiatives.
- Ketan Kulkarni, Deputy MD of Gati Express, credited the sector’s progress to technology adoption and multi-modal connectivity, supporting India’s vision of “Viksit Bharat 2047.”
Future Outlook: Skilling and Infrastructure
- Skill Development:
Addressing workforce gaps remains vital. Programs encouraging employee-linked incentives and structured training are paving the way for a skilled logistics workforce. - Infrastructure Investments:
The 11.1% increase in infrastructure capital expenditure and granting infrastructure status to warehousing facilities highlight the sector’s growth prospects. - Policy Advancements:
Experts, including maritime authority Rajesh Menon, emphasized completing key maritime projects and reducing logistics costs further through technology integration and coastal transport acceleration.
Towards a $5-Trillion Economy
With multimodal connectivity improving through railway, waterway, and highway infrastructure, the logistics sector is poised for significant growth. Experts project a 4-5% cost reduction through continued government reforms, enabling India to compete more effectively in global markets.
As the logistics sector evolves, it will play a pivotal role in realizing India’s aspirations of becoming a $5-trillion economy by 2027 and achieving broader developmental goals.