India’s logistics cost, currently well above that of major economies such as the US, China and the EU, is set to become very competitive in about five years with massive efficiency gains to the economy and last mile connectivity to people even in remote areas, Central Ministers said at an event held recently.
The build-up of infrastructure investment in the country is resulting in improved mobility which is set to bring about big savings for the economy with logistics cost set to come down to 10% from the current 16-18%, Union Minister for Road Transport and Highways Nitin Gadkari said.
Multiple ministries are making coordinated effort under the Prime Minister’s Gati Shakti mission in transforming mobility and building modern infrastructure, a key element of India’s economic revival strategy due to its multiplier effect. Railway Minister Ashwani Vaishnaw, pointed out in his special address that sustaining increased capital spending, embracing new fuels like hydrogen and increasing the share of railways in goods transport with the idea of lowering logistics costs were top on the agenda.
Civil Aviation Minister Jyotiraditya Scindia said that air travel is becoming a more common mode of transport with growth increasingly coming from smaller cities unlike earlier when travel between metro cities and foreign travel drove growth. An approach to make mobility more accessible and to ensure last mile connectivity is the focus of the government, especially in border towns, the Minister said.
Gadkari said bringing India’s logistics cost to around 10% would make it comparable with around 11-12% in Europe, around 10% in the US and below 10% in China. The minister said use of renewable energy including ethanol, electric mobility and liquefied natural gas (LNG) fuelled trucks will all reduce the cost of transportation aided by an improved road network and interconnect between various modes of transport. This would also improve mobility, he said.
“Today the cost of transportation is very high. If we are able to reduce logistics cost to 10%, our exports would also rise one and half times,” the minister said.
Vaishnaw said the public carrier will step up its investment with at least Rs 3 lakh crore a year capital allocation expected from next year onwards. “India should be investing significantly more into railways. We have to invest Rs 3 lakh crore consistently to meet the aspirations of the people and lower logistics cost in the country. If you look at competing economies, they have been investing around Rs 9 lakh crore for the last 30 years,” Vaishnaw highlighted.