Government Strengthens Logistics Framework to Boost Exports Amid Global Disruptions

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