India’s logistics industry has made significant strides in the last decade, as indicated by the World Bank’s Logistics Performance Index (LPI) 2023. India has climbed six spots in the global ranking and is now placed 38th out of 139 countries, reflecting the country’s commitment to investing in both hard and soft infrastructure, as well as technology. This essay will examine India’s logistics industry, its potential, the challenges it faces, and the government initiatives aimed at improving the sector, along with suggestions for the way forward.
Logistics Sector: An Overview
The logistics industry encompasses all activities involved in the supply chain, such as transportation, inventory management, information flow, and customer service. Logistics plays a critical role in a country’s economy, controlling the acquisition, storage, and delivery of resources to their ultimate destination. A robust logistics sector is essential for a country’s exports, providing a significant competitive edge. Logistics determines the success of the country’s supply chain and also influences it globally.
India’s Potential in Logistics
India’s logistics industry is growing rapidly, thanks to infrastructure, technology, and the emergence of new types of service providers that are reshaping the sector by reducing logistics costs and providing effective services. Government policies on taxation and regulation play a significant role in improving the sector. The government has estimated that logistics costs in India account for about 13-14 percent of the country’s GDP. However, according to the Economic Survey 2022-23, logistics costs in India range from 14-18 percent of GDP, which is much higher than the global benchmark of 8 percent.
Challenges Facing India’s Logistics Industry
High transport costs resulting from inadequate infrastructure and weak fiscal policies in developing countries like India are among the challenges faced by the logistics sector. During the most stringent stages of the lockdown, road transportation for large movements of goods was challenging to manage.
Government Initiatives
To reduce logistics costs and boost the economy by 2024-25, the Prime Minister Narendra Modi-led government announced the PM Gati Shakti initiative, a National Master Plan for multimodal connectivity, in October 2021. The National Logistics Policy (NLP) was launched in 2022 to ensure quick last-mile delivery, end transport-related challenges, save time and money for the manufacturing sector and ensure desired speed in the logistics sector.
Logistics Master Plan
This initiative takes a geographical strategy rather than an industry approach. Several projects and activities will be integrated into the plan to expand the mix of intermodal and/or multimodal transportation. Coordinated construction of relevant infrastructure, such as gas and utility pipelines, and optical fiber cable networks, is planned.
National Logistics Law
A national logistics law has been drafted and is under consultation. The law would support the One Nation, One Market objective by providing a flexible regulatory environment (single bill of lading across modes) through a unified legal framework. The law’s provisions will make it possible to assign a distinct logistics account number in place of cumbersome registration processes.
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
To develop an integrated skill development plan for logistics professionals, the government is creating a national logistics workforce strategy.
Why In News
India has made significant progress in the World Bank’s Logistic Performance Index (LPI) 2023, climbing six places to rank 38th among 139 countries. This improvement can be attributed to significant investments in both soft and hard infrastructure, as well as technology. It is worth noting that India’s performance has improved drastically since 2014, when it was ranked 54th on the LPI.
MCQs about India’s Logistics Industry
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what are the two types of infrastructure investments made by India?
A. Soft and hard
B. Soft and flexible
C. Hard and rigid
D. Rigid and flexible
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What is the Logistics Performance Index?
A. An economic index measuring the ease of doing business
B. An index measuring the quality of life of citizens
C. An index measuring a country’s logistics performance
D. An index measuring a country’s education performance
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Which country topped the Logistics Performance Index in 2023?
A. Singapore
B. Germany
C. United States
D. China
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What factor contributed to India’s improved ranking in the Logistics Performance Index?
A. Investments in technology only
B. Investments in soft infrastructure only
C. Investments in hard infrastructure only
D. Investments in both soft and hard infrastructure as well as technology
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