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    Logistics Industry: Make in India

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    Santhosh Chandran R
    The logistics industry in India is poised for accelerated growth due to factors such as GDP revival, increased transportation infrastructure investment, rising e-commerce penetration, and policy initiatives like 'Make in India'. This presents opportunities across transportation, storage, distribution, and allied services. Currently, inefficiencies in the logistics sector are high due to infrastructure bottlenecks and administrative delays. However, the government is working to address these issues through dedicated freight corridors and other infrastructure investments, which could transform the industry.

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    Logistics Industry: Make in India

    Uploaded by

    Santhosh Chandran R
    68 views4 pages
    The logistics industry in India is poised for accelerated growth due to factors such as GDP revival, increased transportation infrastructure investment, rising e-commerce penetration, and policy initiatives like 'Make in India'. This presents opportunities across transportation, storage, distribution, and allied services. Currently, inefficiencies in the logistics sector are high due to infrastructure bottlenecks and administrative delays. However, the government is working to address these issues through dedicated freight corridors and other infrastructure investments, which could transform the industry.

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    Logistics Industry

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    The logistics industry in India is poised for accelerated growth due to factors such as GDP revival, increased transportation infrastructure investment, rising e-commerce penetration, and policy initiatives like 'Make in India'. This presents opportunities across transportation, storage, distribution, and allied services. Currently, inefficiencies in the logistics sector are high due to infrastructure bottlenecks and administrative delays. However, the government is working to address these issues through dedicated freight corridors and other infrastructure investments, which could transform the industry.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    68 views4 pages

    Logistics Industry: Make in India

    Uploaded by

    Santhosh Chandran R
    The logistics industry in India is poised for accelerated growth due to factors such as GDP revival, increased transportation infrastructure investment, rising e-commerce penetration, and policy initiatives like 'Make in India'. This presents opportunities across transportation, storage, distribution, and allied services. Currently, inefficiencies in the logistics sector are high due to infrastructure bottlenecks and administrative delays. However, the government is working to address these issues through dedicated freight corridors and other infrastructure investments, which could transform the industry.

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    of 4

    LOGISTICS INDUSTRY

    Indias logistics sector is poised for accelerated growth, led by GDP revival,
    ramp up in transport infrastructure, e-commerce penetration, impending GST
    implementation, and other initiatives like Make in India.

    This offers opportunities across the spectrum for companies in transportation,


    storage, distribution, and allied services, according to a report by Motilal
    Oswal Securities Ltd.

    Empirical evidence suggests the Indian logistics industry grows at 1.5-2 times
    the GDP growth. Moreover, infrastructural bottlenecks that have stifled
    sectors growth and promoted inefficiency are being addressed by the
    government.

    Building of dedicated rail freight corridors will promote efficient haulage of


    containerised cargo by rail. One key advantage of the dedicated freight
    corridor is that freight trains could be run on time tables similar to passenger
    trains, and the frequency can be theoretically increased to one train in 10
    minutes. This will reduce time for goods transportation between Mumbai and
    Delhi to 18 hours from 60 hours now.
    Also, setting up of various industrial corridors along the dedicated freight route
    will metamorphose the warehousing business from small warehouses spread
    across the country to large, global-size warehouses concentrated in a few
    hubs.

    The proposed new goods and services tax (GST) regime and e-commerce will
    alter the landscape in warehousing, supply chain management and third party
    logistics business. GST implementation will be a game-changing event for
    businesses and particularly for organised logistics players.

    The report says logistics requirement for e-commerce will grow as


    exponentially as e-commerce.

    Indian logistics sector is estimated to have grown at a healthy 15% in the last
    five years. However, growth in sub-sectors varies, with the lowest being in
    basic trucking operations and highest in supply chain and e-tailing logistics.
    Some studies estimate the share of Indias logistics spend in GDP at 13%
    (versus 7-8% in developed countries), implying overall size of $180-220 bn
    (direct costs +wastages from inefficiencies). A comparison with other countries
    shows inefficiencies are high in the Indian logistics sector.

    Infrastructural bottlenecks across modes (rail, road, waterways) have stifled


    the sectors growth. Capacity constraints and inefficiencies can be noted from
    the high transit time in rail as key train routes operate at >110% utilisation,
    thus leading to an average speed of 25 km per hour. The road sector is
    fraught with inadequate and low-quality highway availability, thereby limiting
    the trucks size and impacting economies of operation.

    Despite being an economical mode of transport, railways has lost market


    share in freight movement to roads in the last few decades due to capacity
    constraints. Compared to other countries, Indias rail share in goods transport
    is 31%, which has come down from 60% in 1980s and 48% in 1990s.

    Another key constraint is administrative delays. Despite being a relatively low-


    cost country, logistics cost in India is higher due to administrative delays led
    by paper workleading to huge inventory investments and wastageand a
    complex tax structure.

    Also, low penetration of new technology in the supply chain process is


    resulting in damage of goods. India has the least warehouse capacity with
    modern facilities, and given the fragmented industry state (large share with
    unorganised players), investment in IT infrastructure is almost absent at
    required scale.

    Logistics encompasses a wide array of services like transportation (air,


    surface, internal waterways, sea), storage (warehousing, logistics parks,
    container depots, cold chains) distribution (courier service, e-tail
    deliveries),and integrated/allied services (freight forwarding, 3PL) and
    investment in logistics boosts growth in its upstream and downstream
    economic activities, says the report.

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