“An effective and efficient logistics ecosystem can be a key contributor to robust economic growth in the country”. Discuss various measures taken by the government in the recent budget to address challenges in the logistics sector. Mention how this sector helps in economic growth. What is the role of National logistics policy in enhancing the logistics sector? Mention concerns in the Indian logistics sector.
Logistic industry in India is evolving rapidly; it is the interplay of infrastructure, technology, and new types of service providers. Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption.
Role of the logistics sector in Economic growth:
- It facilitates domestic and foreign trade
- It will promote global competitiveness
- It enhance incomes
- It drives the ‘Make in India’ initiative and reduces economic disparities across geographies.
Measures taken by the government in the budget:
- Geo-tagging of all warehousing.
- Village Storage Scheme through Women Self-help groups shall provide backward linkages for seeds thereby reducing logistics costs.
- Cold chains for fish and perishables shall be promoted.
- Refrigerated vans shall be attached to passenger trains to promote movement of perishables quickly.
- Krishi trains shall also be run on PPP mode.
- Krishi Udan Scheme shall be promoted / launched for horticulture and perishable commodities shall be transported through the air-route that will especially benefit the North-East region and tribal area.
- Cluster approach shall be adopted for promoting horticulture. One Product One District will be encouraged.
- National Organic e-Market will be developed for organic products.
- Accelerated development of highways will be undertaken.
- Delhi – Mumbai and Chennai – Bengaluru express highways to be made operational by 2023.
- Inland Waterways shall be promoted under the Programme called Arth-Ganga i.e., promoting economic activities along with banks of the river.
- 100 more airports shall be established under the UDAN scheme.
Role of the National Logistics Policy
- Providing an impetus to trade and hence economic growth by driving competitiveness in exports.
- Doubling employment in the logistics sector by generating additional 10-15 million jobs and focusing on enhancing skills in the sector and encouraging gender diversity.
- Improve India’s ranking in the Logistics Performance Index.
- Strengthening the warehousing sector in India by improving the quality of storage infrastructure including specialized warehouses across the country.
- Reducing losses due to agro-wastage to less than 5% through effective agro-logistics.
- Providing impetus to the MSME sector of the country through a cost-effective logistics network.
- Promoting cross regional trade on e-commerce platforms by enabling a seamless flow of goods.
- Encouraging adoption of green logistics in the country.
Concerns in logistics sector:
- India’s logistics sector is very complex
- Unregulated and fragmented logistics sector: India’s logistics sector has remained fragmented and unregulated, despite its centrality to economic growth.
- The logistics cost in India is very high compared to developed countries.
- High cost reduces competitiveness of Indian goods both in domestic as well as export markets.
- Lack of adequate infrastructure: Almost 25-30% of fruits and vegetables produced in India are wasted due to lack of cold chain infrastructure
Logistics is a backbone of India’s international trade and will help in diversification of not only India’s export basket but also of products and countries.