Brief Context
Context The Government of India is actively enhancing logistics infrastructure to address global logistics disruptions and enhance export efficiency. Overview of the Logistics Landscape in India India’s logistics sector was valued at USD 215 billion in 2021. It is well-positioned for strong growth with an expected compound annual growth rate (CAGR) of 10.7% till 2026.
Source Content
Syllabus: GS3/ Economy
Context
- The Government of India is actively enhancing logistics infrastructure to address global logistics disruptions and enhance export efficiency.
Overview of the Logistics Landscape in India
- India’s logistics sector was valued at USD 215 billion in 2021. It is well-positioned for strong growth with an expected compound annual growth rate (CAGR) of 10.7% till 2026.
- In 2017, a separate logistics unit was created under the Department of Commerce to oversee the Integrated Development of Logistics Sector.
- The Logistics Industry supports manufacturing, retail, e-commerce, and services by managing inventory, transportation, storage, warehousing, and distribution, linking producers to consumers, both domestically and internationally.
Key Advantages of Efficient Logistics Infrastructure
- Supply chain efficiency: Logistics ensures a smooth and efficient supply chain, minimising delays and reducing lead times.
- Connectivity and Accessibility: Logistics networks enhance connectivity and accessibility, linking various regions and markets.
- Cost reduction and competitiveness: Efficient logistics operations contribute to cost reduction in transportation, storage, and distribution.
- Job creation: The sector is projected to add 1 crore jobs by 2027.
- Economic integration: A well-developed logistics sector facilitates economic integration by connecting various economic zones and promoting a seamless flow of goods and services.
Challenges
- High Logistics Cost: India’s logistics cost is very high at around 13–14% of GDP, making Indian exports less competitive compared to global peers.
- Infrastructure Gaps: The sector suffers from infrastructure gaps in warehousing, cold storage, and last-mile connectivity.
- Overdependence on Road: There is an overdependence on road transport, which causes congestion, delays, and higher transportation costs.
- Environmental Concerns: Heavy dependence on diesel-based trucking increases carbon emissions and contributes to environmental pollution.
Source: PIB