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Logistics costs have been one of the biggest stumbling blocks for the Indian economy. In this context, how draft national logistics policy 2018 and implementation of GST will help in reducing logistics costs and provide stimulus to the growth of the logistics sector.

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  • Give a brief introduction about the Logistics Sector.
  • Write about challenges in the Logistics sector
  • Write how logistics policy and GST will help in this regard
  • Provide Conclusion based on arguments provided.
The presence of a robust logistics-related infrastructure and an effective logistics management system facilitates seamless movement of goods from the point of origin to that of consumption, and aids an economy’s movement to prosperity.

Logistics Sector at a Glance:

The Indian logistics sector is on a big growth tide.
  • According to the domestic rating agency ICRA, the Indian logistics sector is expected to grow at a rate of 8-10% over the medium term.
  • The logistics industry of India is currently estimated to be around US$215 billion.
  • The last few years have seen significant development for this industry which is reflected in the global rankings. According to the Global Ranking of the World Bank’s 2016 Logistics Performance Index, India jumped to 35th rank in 2016 from 54th rank in 2014 in terms of overall logistics performance. In 2018, India stood at 44th rank.
  • In 2017, the logistics sector absorbed 22 million people. Employment is expected to surge to 40 million by 2020.
  • Experts predict that the logistics sector can be the largest job creator by 2022.
Some key challenges:
  • The Indian logistics industry is highly fragmented and unorganized, with the organized players accounting for approximately 10% of the total market share.
  • The high cost of logistics – impacting competitiveness in domestic & global market
  • Unfavourable modal mix (Roadways 60%, Railways 30%) and inefficient fleet mix.
  • Under-developed material handling infrastructure and fragmented warehousing.
  • High dwell time and lack of seamless movement of goods across modes.
  • The most serious challenge faced by the logistics industry today is insufficient integration of transport networks, information technology, and warehousing and distribution facilities.
  • Regulations exist at a number of different tiers, is imposed by national, regional and local authorities. The regulations differ from city to city, hindering the creation of national networks.
Some of the key objectives Draft National Logistics the policy:
  • The aim is to reduce the logistics cost from the present 14% of GDP to less than 10% by 2022.
  • A National Logistics Portal is being developed which will be a single-window online marketplace for trade and will connect business, create opportunities and bring together various ministries, departments and the private sector. Stakeholders like traders, manufacturers, logistics service providers, infrastructure providers, financial services, Government departments and groups and associations will all be on one platform.
  • A data and analytics centre for monitoring key logistics metrics
  • A centre of excellence to drive innovation
  • An Integrated National Logistics Action Plan for all logistics related development.
  • Further, the policy envisages to create employment opportunities for 10 Million -15 Million people and also focus on enhancing skills in the sector, while trying to improve India’s ranking in the Logistics Performance Index to between 25 to 30.
  • It also aims to promote inter-regional trade on e-commerce platforms.
GST a game-changer reform for logistics sector:
  • GST has replaced at least 7 indirect tax heads and has eliminated the need for warehouse hubs across States.
  • The GST regime is certain to expedite faster conversion of informal logistics setups to formal ones.
  • Speed up freight movement at interstate borders due to dismantling of check posts and the reduction in truck turnaround time following GST is a major stimulus to logistics growth, leading to at least 12-15% reduction in the turnaround time of trucks.
  • Pre-GST, the Indian logistics sector was struggling to add value to customers, compared to global peers. Indian firms were seen as labour contractors or mere transporters, which denied them the benefits of being a part of the supply chain. But the equation has changed now.
  • Post GST, there is a marked improvement in the use of technology and digitisation by logistics players, third party logistics(3PL) players can become real ‘differentiators’ as they embrace technology to enhance visibility of load carried, turn-around time, vehicle utilisation, improvement in loading/unloading time by removing congestion at the docks, and the like.
Other initiatives taken by the government:
  • A new Logistics Division has been set up in the Department of Commerce to coordinate integrated development of the sector by way of policy changes, improvement in existing procedures, identification of bottlenecks and gaps, and the introduction of technology-based interventions.
  • Multi-Modal Logistics Parks Policy (MMLPs) are a key policy initiative of the Government of India to improve the country’s logistics sector. This initiative will lower freight costs, reduce vehicular pollution and congestion and cut warehouse costs to promote domestic and global trade.
  • Logistics Portal: A National Logistics Portal is being developed in phases to serve as a transactional e-marketplace by connecting buyers, logistics service providers and relevant government agencies. This portal will be the single window marketplace to link all stakeholders.
  • Logistics Data Bank: As a part of the India-Japan bilateral cooperation, a Logistics Data Bank Project has been commissioned to track containers on a ‘near-real-time’ basis. RFID tags are placed on every container coming out of the ports to track the container’s movement.
  • The Government has launched many flagship programmes like the Bharatmala Yojana, the Sagarmala Yojana and the Dedicated Freight Corridors. The objective of these programmes is to develop infrastructure to meet the growing demand for logistics in the country and to make a modal shift on more cost-effective modes of transport.
  • 111 waterways have been identified for development.
  • Infrastructure status has been given to select logistics activities like warehousing, cold chains, Multimodal logistics parks and slurry pipelines.
  • A subsidy is provided to develop cold chains and packhouses.
The commitment of GoI (Government of India) towards an integrated development of the logistics sector through policy amendments, infrastructural development, tax reforms and technology adoption will certainly deliver desirable results. It will enhance our trade competitiveness, create jobs, shoot up country’s performance in global rankings and pave the way for India to become a logistics hub. Such measures will also contribute to the creation of a New India by 2022.

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Similar questions

Read the following passages and answer the items that follow each passage. Your answers to these items should be based on the passages only.


Improving efficiency of the logistics sector is of high importance for the country’s economy as it boosts economic growth, grows exports through global supply chains and generates employment. While India’s passenger and freight mobility sectors are becoming more efficient and the logistics is sector is growing at CAGR of 10.5% and expected to reach about USD 215 billion in 2020 , there are a set of interconnected problems in the system, which need to be addressed to further enhance efficiency. Logistical inefficiencies lead to reduced employment opportunities, perpetuate a poverty cycle for rural populations, make roads and highways unsafe, and contribute to pollution. Conversely, enhancing the efficiency of logistics can create high quality economic growth and employment opportunities, improve safety and public health, and support India’s successful fulfilment of international commitments towards climate change.

India is currently the fastest growing major economy globally, with GDP growing by 6.6% in 2017–2018 and expected to accelerate to 7.3% in 2018 and 2019. As a result of this rapid growth, India is poised to become the third largest economy in the world by 2030 and the second largest, after only China, in terms of Purchasing Power Parity (PPP) by 2040. In order to realize these projections, the Government of India (GoI) has launched the “Make in India” initiative with an aim to support the manufacturing sector of the Indian economy and elevate its contribution to GDP from the current 17% up to 25%. Efficient logistics are a cornerstone for the continuation of India’s economic development over the coming decades. The robust growth in manufacturing envisioned through the “Make in India” initiative will demand high levels of logistical efficiency, which means that goods must not only be produced, they must also be efficiently transported to markets at reasonable prices.

While the growth in GDP created by logistics improvements is important, even more important is the quality of that growth and the employment and income it creates, especially for the most economically vulnerable segments of the population. World Bank research in Latin America showed that reducing the share of logistics costs in the final price of goods by 14% can increase demand for those goods by 8–18% and increase employment in that sector by 2.5%– 16% . Such an impact is particularly important for micro small and medium enterprises, which employ over 110 million Indian citizens. Specifically for agricultural products, another critical sector of the Indian economy, the same reduction in logistics costs to 14% of final prices increased demand by 12% and increased agricultural employment by 6% —boosting both rural incomes and nutrition and food security for the entire country.

Q. Consider the following statements

Which of the statements given above is/are incorrect?

निम्नलिखित गद्यांशों को पढ़ें और उन मदों का उत्तर दें जो प्रत्येक गद्यांश का अनुसरण करते हैं। इन मदों के लिए आपके जवाब केवल पैसेज पर आधारित होने चाहिए।

गद्यांश 1

देश की अर्थव्यवस्था के लिए रसद क्षेत्र की दक्षता में सुधार करना बहुत महत्वपूर्ण है क्योंकि यह आर्थिक विकास को बढ़ावा देता है, वैश्विक आपूर्ति श्रृंखलाओं के माध्यम से निर्यात को बढ़ाता है और रोजगार पैदा करता है। भारत के यात्री और माल ढुलाई के क्षेत्र अधिक कुशल होते जा रहे हैं और लॉजिस्टिक्स क्षेत्र 10.5% के सीएजीआर से बढ़ रहा है और 2020 में लगभग 215 बिलियन अमरीकी डालर तक पहुंचने की उम्मीद है । दक्षता बढ़ाने के लिए सिस्टम में समस्याओं का एक सेट है, जिसे दूर किये जाने की आवश्यकता है । तार्किक अक्षमताएँ रोजगार के अवसरों को कम करती हैं, ग्रामीण आबादी के लिए गरीबी चक्र को बनाए रखती हैं, सड़कों और राजमार्गों को असुरक्षित बनाती हैं और प्रदूषण में योगदान करती हैं। इसके विपरीत, रसद की दक्षता बढ़ाने से उच्च गुणवत्ता वाला आर्थिक विकास और रोजगार के अवसर पैदा हो सकते हैं, सुरक्षा और सार्वजनिक स्वास्थ्य में सुधार हो सकता है और जलवायु परिवर्तन के प्रति भारत की अंतर्राष्ट्रीय प्रतिबद्धताओं की पूर्ति हो सकती है।

2017-2018 में 6.6% जीडीपी के साथ भारत वर्तमान में विश्व स्तर पर सबसे तेजी से बढ़ने वाली प्रमुख अर्थव्यवस्था है । इस तेजी से विकास के परिणामस्वरूप 2030 तक भारत तीसरी सबसे बड़ी अर्थव्यवस्था बनने की ओर अग्रसर है और 2040 तक क्रय शक्ति समानता (पीपीपी) के संदर्भ में केवल चीन के बाद दूसरी बड़ी अर्थव्यवस्था बन सकती है । इन अनुमानों को साकार करने के लिए, भारत सरकार (भारत सरकार) ने "मेक इन इंडिया" पहल शुरू की है। भारतीय अर्थव्यवस्था के विनिर्माण क्षेत्र का समर्थन करने और जीडीपी में इसके योगदान को मौजूदा 17% से बढ़ाकर 25% करने का लक्ष्य है। आने वाले दशकों में भारत के आर्थिक विकास की निरंतरता के लिए कुशल रसद एक आधारशिला है। "मेक इन इंडिया" पहल के माध्यम से विनिर्माण क्षेत्र में मजबूत वृद्धि उच्च दक्षता की रसद दक्षता की मांग करेगी, जिसका अर्थ है कि माल न केवल उत्पादित किया जाना चाहिए बल्कि उसे उचित मूल्य पर बाजारों में कुशलता से पहुंचाया जाना चाहिए।

लॉजिस्टिक्स सुधारों द्वारा बनाई गई जीडीपी में वृद्धि महत्वपूर्ण है पर इससे भी अधिक महत्वपूर्ण है विकास की गुणवत्ता और इससे पैदा होने वाला रोजगार और विशेष रूप से जनसंख्या के सबसे आर्थिक रूप से कमजोर वर्गों की आय में बढ़ोत्तरी । लैटिन अमेरिका में विश्व बैंक के शोध से पता चला है कि माल की अंतिम कीमत में रसद लागत के हिस्से को 14% तक कम करने से उन सामानों की मांग 8-18% बढ़ सकती है और उस क्षेत्र में रोजगार में 2.5% - 16% की वृद्धि हो सकती है। ऐसा प्रभाव सूक्ष्म लघु और मध्यम उद्यमों के लिए विशेष रूप से महत्वपूर्ण है, जो 110 मिलियन से अधिक भारतीय नागरिकों को रोजगार देते हैं। विशेष रूप से कृषि उत्पाद भारतीय अर्थव्यवस्था के लिए एक और महत्वपूर्ण क्षेत्र है । अंतिम कीमतों पर रसद की समान लागत में 14% तक की कमी करने से 12% तक मांग में वृद्धि हुई है और 6% तक कृषि रोजगार में वृद्धि हुई है जिससे ग्रामीण आय , पोषण और खाद्य सुरक्षा दोनों बड़ी है ।

Q. निम्नलिखित कथनों पर विचार करें

  1. रसद सुधारों द्वारा बनाई गई जीडीपी में वृद्धि रोजगार और आय में वृद्धि का कारण है।
  2. पूरे देश के लिए पोषण और खाद्य सुरक्षा में सुधार के लिए कृषि उद्योग को बढ़ावा देने से रसद दक्षता के विकास में मदद मिल सकती है।

ऊपर दिए गए कथनों में से कौन सा गलत है / हैं?

  1. Both 1 and 2
    दोनों 1 और 2

  2. Neither 1 nor 2
    न तो 1 और न ही 2

  3. 2 only
    केवल 2

  4. 1 only
    केवल 1
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