An efficient logistics sector is pivotal for India to become a globally preferred business destination. It reduces manufacturing costs, makes businesses more competitive, and links them with global value chains, boosting the Make in India initiative. The sector is also one of India’s largest employers, employing over 22 million people.
In 2023, India ranked 38 out of the 139 nations in the World Bank’s Logistics Performance Index (LPI), up six places from the previous rankings in 2018. India has now set the ambitious goal of ranking among the world’s top 25 nations by 2030, bringing logistics costs down to the equivalent of less than 10% of GDP.
Decisive actions have been taken to develop a logistics backbone for the country. The national highways have expanded at an unprecedented rate, connecting ports to hubs of economic activity. The railways too have taken a quantum leap by building electrified freight-only corridors that link manufacturing centres to ports on the eastern and western coasts. Long-defunct inland waterways are being rejuvenated. Many routes — including National Waterway 1 — have been strengthened, and efforts are on to move cargo through new river-to-sea connections.
The Pradhan Mantri Gati Shakti National Master Plan and the National Logistics Policy are key initiatives. The PM Gati Shakti initiative is breaking down the siloed approach to the planning and execution of multimodal infrastructure projects by integrating data from 16 ministries and departments onto a single Geographic Information System-based platform.
Port and customs services have also seen significant improvements. Cargo is now cleared much faster and containerised cargo can be tracked digitally. Today, it takes about a day for a ship to turn around at the Nhava Sheva (JN) Port in Navi Mumbai. This is almost at par with Singapore, a world leader in logistics, which takes just 0.75 days. Gujarat has been ranked the top performer among coastal states in India, and West Bengal is taking advantage of its strategic location by placing a new thrust on logistics infrastructure and services.
Even so, new technologies such as big data and artificial intelligence can be put to greater use to fulfil the vision of a nationally integrated, cost-effective, reliable, and digitally enabled logistics ecosystem.
First, the PM Gati Shakti platform can be overlaid with information on trade flows across the country. This will enable planners to mine the plethora of data available from the Goods and Services Tax Network and E-Way bills to see where infrastructure needs to be improved.
Second, the multimodal logistics parks planned with connectivity to railway corridors can serve as warehouses and data centres, attracting private sector service providers and investors, while giving manufacturers last-mile connectivity.
Third, the country’s youth will need to be equipped with the skills needed by this dynamic industry. Women too can benefit from new jobs, especially in softer skills such as packaging, sorting, and warehouse management. The Logistics Sector Skill Council is training workers in newer technologies to help them become full-fledged logistics professionals.
The World Bank has been supporting India through a variety of rail, road, and inland waterway projects. It is also helping the country increase digitisation and improve trade services, among other measures, and supporting the development of skills for this rapidly evolving industry.
India’s push to improve its logistics performance will not only improve its trade competitiveness, but will also increase jobs, and enable the country to emerge as a logistics hub for the region and beyond.
Auguste Tano Kouamé is the World Bank's Country Director for India. This Opinion piece first appeared in The Financial Express on July 17, 2024.
