Day 25 – Q. 5. “Efficient logistics is the backbone of economic competitiveness.” Examine the current challenges in India’s logistics sector and evaluate the significance of the PM Gati Shakti scheme and National Logistics Policy in overcoming them. (250 words, 15 marks) 

Q. 5. “Efficient logistics is the backbone of economic competitiveness.” Examine the current challenges in India’s logistics sector and evaluate the significance of the PM Gati Shakti scheme and National Logistics Policy in overcoming them. (250 words, 15 marks)

Introduction 

India’s logistics sector—comprising transport, warehousing, freight, and inventory  management—contributes around 14% to GDP. As per the World Bank, inefficiencies hamper  competitiveness, necessitating reforms like PM Gati Shakti and the National Logistics Policy. 

Body 

Challenges in India’s Logistics Sector 

1. High Logistics Cost: Costs at 14–18% of GDP, much higher than global benchmarks of ~8%,  reducing competitiveness. 
2. Road-Heavy Modal Share: Over 60% freight by road creates congestion, emissions, and  inefficiencies. 
3. Fragmented Infrastructure Planning: Silos across ministries lead to duplication and delays.
4. Weak Multimodal Integration: Scarcity of rail/port linkage limits economies of scale.
5. Last-Mile Delivery Bottlenecks: Poor warehousing and clearances block urban logistics.
6. Low Tech Adoption: IoT/RFID uptake remains restricted to a few players.
7. State-Level Disparities: Uneven logistics efficiency across states. 
8. The National Transport Development Policy Committee (NTDPC) 2014 advocated integrated  multimodal planning and a unified transport ministry, which remains partly unimplemented. 

Significance of PM Gati Shakti Scheme 

1. Integrated Planning Platform: GIS portal links 16 ministries to reduce duplication.
2. Multimodal Connectivity: Enables MMLPs, economic zones, and freight corridor alignment.
3. Real-Time Monitoring: Tracks project timelines and costs to prevent overruns.
4. GIS-Based Mapping: Uses satellite data to identify gaps in connectivity.
5. Economic Survey 2022–23: Recognized PM Gati Shakti as pivotal in boosting capital  formation and reducing logistics inefficiencies. 

Role of National Logistics Policy (NLP), 2022 

1. Cost Reduction Goal: Targets cut logistics costs to ~8% of GDP by 2030.
2. Unified Digital Interface (ULIP): Links 30+ digital systems for real-time cargo tracking.
3. Standardization & Skilling: Advocates warehousing norms and logistics certification.
4. LEADS Index: Facilitates inter-state benchmarking and policy improvement.
5. Committee Input: DPIIT’s Logistics Development Committee emphasized digitization and  private-sector integration in NLP formulation. 

Progress Achieved So Far 

1. World Bank Logistics Index: India’s rank improved from 44 (2018) to 38 (2023).
2. National Master Plan Projects: Over 1000+ projects are live on PM Gati Shakti portal,  enabling quicker approvals. 
3. Dedicated Freight Corridors: Western and Eastern DFCs nearing completion; transit time cut  by ~40–50%. 
4. Multimodal Logistics Parks: 35 MMLPs are under development in locations like Nagpur,  Chennai, and Guwahati to enhance freight movement. 

Way Forward 

1. Modal Shift to Rail & Waterways: NITI Aayog recommends increasing rail freight share to  45% and reviving inland waterways for cost-efficient, low-carbon transport.
2. Adopt Green and Smart Logistics: Encourage electric freight fleets, solar-powered  warehouses, and end-to-end digital integration. 
3. Build Regional Logistics Hubs: Promote state-level logistics policies and infrastructure  clusters to bridge regional disparities and improve last-mile connectivity. 
   

Conclusion

A robust logistics ecosystem will enhance ease of doing business, support Make in India, and help  achieve the $5 trillion economy vision. Gati Shakti and NLP, if effectively implemented, can  transform India into a global logistics powerhouse.