The Asian Development Bank (ADB) has recently approved a substantial policy-based loan of $350 million aimed at enhancing and modernising India's logistics sector. This decision, announced on 6 December, is intended to support the second subprogram of the Strengthening Multimodal and Integrated Logistics Ecosystem Program, a pivotal initiative in India's broader efforts to establish a robust and comprehensive logistics framework across various levels of governance—central, state, and city.
The significance of developing India's logistics sector cannot be overstated, particularly its role in bolstering the competitiveness of the country's manufacturing industry. ADB has emphasised that through strategic reforms, infrastructure advancements, and the adoption of digital technologies, the ongoing governmental reforms are poised to markedly alter the logistics landscape in India. These changes are anticipated to lead to reduced operational costs, enhanced efficiency, and the generation of employment opportunities, all while promoting gender inclusion and driving sustainable economic development.
The Government of India has initiated a range of strategic policies to tackle challenges within the logistics sector. Among these is the Prime Minister Gati Shakti-National Master Plan (PMGS-NMP) and the National Logistics Policy (NLP). Both initiatives focus on improving infrastructure, refining processes, and encouraging the digitisation of logistics operations.
According to ADB, the programme has already bolstered the government's reform activities, resulting in an improved ranking in the World Bank’s Logistics Performance Index and a notable reduction in logistics costs. Key interventions resulting from this programme include the foundation of institutional arrangements for logistics planning at local and regional levels, the implementation of a grain storage plan, and the adoption of eco-friendly guidelines for inland waterways.
Sameer Khatiwada, a Senior Public Management Economist at ADB, highlighted the critical link between logistics development and manufacturing competitiveness. Speaking to Swarajya, Khatiwada stated, “The development of the logistics sector has a profound impact on the manufacturing sector's competitiveness. Improved logistics efficiency enhances supply chain resilience, reduces transaction costs, and boosts export competitiveness.” He further asserted that “the integration of digital technologies and standardized processes facilitates smoother movement of goods, which is crucial for manufacturing growth.”
Historically, from the year 2000 to 2022, India’s overall goods exports surged from $48.5 billion to an impressive $467.5 billion, while industrial exports rose from $39.6 billion to $317.4 billion. With an ambitious goal set by the government to achieve $2 trillion in goods and services exports by 2030, the ongoing programme is expected to drive productivity and streamline the transfer of goods while simultaneously reducing logistics costs and greenhouse gas emissions.
In addition to enhancing economic efficiency, the reforms within the logistics sector are anticipated to create significant employment opportunities across both urban and rural landscapes. The increasing demand for skilled workers in logistics, spurred by private sector investments and improved operational efficiencies, is projected to play a vital role in job creation. Furthermore, as logistics processes become more digitised and automated, there is potential for the emergence of new job types that align with the industry's evolving requirements, as noted by ADB.
The developments within India's logistics sector signal a concerted effort towards modernisation that aligns with global trends in automation and digital integration, marking a decisive step towards achieving broader economic goals.
Source: Noah Wire Services