India unveils plan to slash the cost of logistics

21 September 2022

India aims to lower the cost of logistics – which currently stands at around 13-14% of GDP –  as part of a new National Logistics Policy.

Prime minister Narendra Modi said he aimed to bring the cost of logistics down to a single figure percentage – in line with the world’s 8% average. He said he was bringing a host of logistics-based initiatives under the umbrella of one policy.

“From 13-14% logistics cost, we should all aim to bring it to single digit as soon as possible. This, in a way, is a low-hanging fruit,” he said.

“To ensure quick last-mile delivery, end transport-related challenges, save time and money of the manufacturers, prevent wastage of the agro-products, concerted efforts were made and one of the manifestations of those efforts is today’s National Logistics Policy.”

Modi spoke of creating dedicated freight corridors to improve logistics connectivity while the total capacity of Indian ports had increased significantly and the average turnaround time for container vessels had fallen from 44hrs to 26hrs.

He said 40 air cargo terminals had been constructed, 30 airports have been provided with cold-storage facilities, and 35 multimodal hubs are being built.

“Through waterways, we can do eco-friendly and cost-effective transportation. For this, many new waterways are also being built in the country,” Modi added.

He said the government was working on initiatives to streamline passage of goods through customs and creating a unified drone policy.

A Unified Logistics Interface Platform will bring digital services related to the transportation sector onto a single portal, reducing paperwork for exporters and ensuring shorter and smoother cargo movement.

The system will also enable the exchange of information confidentially on a real-time basis.

A new digital platform Ease of logistics Services has also been set up which aims to make logistics more transparent.

“Through this portal, industry associations can directly take up any such matters which are causing problems in their operations and performance with the government agencies,” Modi said.

Invest India, the country’s investment promotion agency, said the policy was an effort “to address cost and inefficiency by issues lying down an overarching interdisciplinary, cross-sectoral, and multi-jurisdictional framework for the developing entire logistics ecosystem”. 

“The goal of this policy is to make the logistics industry more efficient and lower its costs. The strategy aims to boost economic growth, provide employment opportunities, and make Indian products more competitive in the global market,” the agency said.

It estimated the value of the Indian logistics market will rise from a current $160bn to $215bn over the next two years.

The sector currently employs more than 22m people.

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