The Impact on Transportation and Logistics Sector
The transportation and logistics sector in India is rapidly evolving due to the “Make in India” initiative, the implementation of the Goods and Services Tax (GST), the entry of global players in the logistics industry, and the development of infrastructure for e-commerce and logistics parks. The sector is dominated by roadways, and the Indian government is undertaking initiatives to enhance logistics efficiency and develop the road infrastructure in the country.
The government has launched programs like LEEP, NHIDCL, NHDP, and Bharatmala to improve the cost, time, and monitoring of freight transport and to accelerate road construction, connectivity, and upgrading of highways. Despite progress, India’s logistics industry lags behind other countries in terms of efficiency.
A transformative stage is trending in India’s transport and logistics sector. The growing production field under the “Make in India” initiative of the federal government, the entry of worldwide players in the logistics industry, along with the implementation of the Goods and Services Tax (GST), and evolving avenues such as logistics park infrastructure and e-commerce are altering the industry’s course and its dynamics.
Now, let’s examine the state of the logistics sector in India, evaluate the ongoing difficulties and the role played by the Indian government by significant factors in reshaping the industry.
Logistics and Transportation industry in India
In India, the logistics industry mainly includes freight and transportation via highway, rail, air, and water, as well as other related sectors such as warehousing and inventory stocks. However, roadways dominate the industry, making up approximately 60% of total freight traffic, leading to an increase in demand for GPS fleet management solutions.
As per the Economic Survey 2017-18, India’s logistics market is expected to reach Rs 215 billion (US$300 million) by 2020. India is currently ranked 35th in the World Bank’s Logistics Performance Index (LPI) – which underlines the relatively low efficiency of trade logistics in India, compared to other countries.
The Indian road network, which includes Expressways, State Highways, National Highways, Major District Roads and Village Roads, is the world’s second-largest, stretching up to 5.5 million kilometers.
In recent years, India’s road infrastructure has seen steady development. Networking has enhanced and fast growth has been focused on road transport. Roads provide individuals with better access to services, easier transportation, and better movement. Recognizing the importance of the country’s reliable and fast road network and the role it plays in affecting its economic development, the Ministry of Road Transport and Highways (MORTH) has taken responsibility for constructing quality highways and roads across the nation.
The year 2017-18 experienced a significant push to expand the country’s Highway Network. National Highways managed a record 16,271 km and 8,231 km have been built. In Financial Year 2015-16, more than 6,061 kilometers of roads were built. For rural roads, the highest daily construction rate of 133 km has been accomplished. Budget 2017-18 also expressed optimism with a complete outlay of USD 14 billion for the road and highway industry. Of this, USD 10 billion has been assigned to National Highways, while the rest is assigned to the Pradhan Mantri Gram SadakYojana (PMGSY) rural highways program.
Following are the main initiatives undertaken by the Government of India to develop the road infrastructure in the country.
Logistics Efficiency Enhancement Programme (LEEP)
The four pillars of this program:
- Value-added services such as customs clearances.
- Multimodal freight movement
- Freight aggregation and distribution
- Storage and warehousing
The program seeks to improve freight transport in India by enhancing costs, time by as much as 10% and monitoring and transferring of shipments through logistics, procedural and IT measures.
Under the first phase of LEEP, USD 5 billion was allocated to the development of bidirectional logistics parks, and for this purpose 15 locations were identified. These parks will guarantee that moving from one mode of transportation to another does not lead to unnecessary loss of time and waste of handling.
National Highways and Infrastructure Development Corporation Ltd. (NHIDCL)
NHIDCL was established in July 2014 by MORTH to accelerate road construction in strategic fields along the international border and the North-Eastern region. It is responsible for the development and improvement of road connectivity in the North-Eastern region for 10,000 km of highways. NHIDCL is leading in laying 142 National Highways with a budget of USD 15.3 billion for the growth of 8,100 km of highways. NHIDCL embraced the use of e-office, e-tendering and e-governance techniques on the lines of 500 companies.
NATIONAL HIGHWAYS DEVELOPMENT PROJECTS(NHDP)
The seven-phase NHDP is being introduced with complete estimated spending of USD 92 billion by the National Highways Authority of India (NHAI). More than 49,260 km of highways are being upgraded to meet global requirements as the country’s biggest highway construction project since 2000.
Key NHDP projects include the following in its various stages: Road networks of major cities of the country to the National Highways.
- NHDP on the following paths to 4/6 lane norms: Golden Quadrilateral linking four main metropolitan towns. Delhi-Mumbai-Chennai-Kolkata. North-South & East-West Corridors (NS-EW) linking Srinagar to Kanyakumari and Silchar with a spur from Porbandar to Cochin to Salem.
- 4,000 km of National Highways Upgrade to 2-lane paved highway of approximately 20,000 km of National Highways.
- Six lanes of 6,500 km of current National Highways with 4 lanes.
- Development of 1,000 km of completely regulated expressways under the system of Public-Private Partnership (PPP) following the strategy of Design–Build–Finance–Operate (DBFO). Nine such expressways along high-density corridors have been recognized. These corridors are going to try to guarantee faster connectivity.
- Standalone construction of Bypasses, Grade Separators, Ring Roads, Flyovers, Highways, Tunnels, Underpasses, Bridge Roads, Service Roads, etc.
The initiative envisages fresh projects such as the growth of highways for border and international connectivity, roads for coastal & port connectivity and improvements in Economic Corridors for National Corridors Efficiency. The “mega-plan,” the second-largest road project after NHDP, will further bolster the ongoing road/highway development projects and will see the construction of 20,000 kilometers of highways in its first phase.
Ultimately, the highways of India are essential for its ever-growing economy; they shape the nation’s backbone. Prosperity will flow through them. As such, while other schemes were uncertain, it is the act of fixing the highways of India that can truly push the nation into fresh financial boundaries.
THE “ROAD” AHEAD
The vision of building the nation’s outstanding road infrastructure is already bearing fruit with a record 22 km highway built-in 2017-18 per day. The Government of India has set the goal for Financial Year 2019-20 to build 40 km of road per day. Such rapid improvements mean, the faster the transportation and logistics business rise, thus leading to investment in fleet management companies.
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