Modi 2.0: Logistics Cost Expected to be Driven Down

Many elements can make Make-In-India flourish. Good industrial policy is one of them. Logistics, and its efficiency, is certainly another. As a percentage of GDP, logistics costs in India represent 13 to 14% of GDP. How can the new government of the NDA help reduce it to 10% or less?

What we can expect in terms of policy over the next couple of years?

The Draft National Logistics policy will be finalized and India could finally get an Integrated National Logistics Action Plan, like some of the more developed countries. ‘Integration’ refers to the various ministries currently responsible for logistics: railways, roads, maritime transport and civil aviation. The draft policy states that “the National Integrated Logistics Action Plan will serve as an optimized plan to define logistical priorities in all ministries, including the Ministry of Maritime Transport, the Ministry of Railways, the Ministry of Civil Aviation Ministry, D/O posts and user departments, Ministry of Coal, Ministry of Steel, Ministry of Mines and others.) Subsequently, it is important to define an annual implementation plan and continuously monitor progress based on the defined objectives of efficiency, cost reduction and residence time. The annual implementation plan will identify and guide specific interventions to optimize logistics costs for commodities in the region.

Modi 1.0 has done some tremendous work in the logistics sector, the most popular is the GST. The same taxes throughout India meant that warehouses had to be in different geographical areas in order to take advantage of tax arbitrage. It is too early to say, but it seems that the fastest movement of products is already translating into cost savings for companies. The next big revolution must be about multimodal transport. There is a heavy reliance on roads, which now account for approximately 60% of the transport mix. Railroads represent 31% of the total, compared to 9% of waterways. The Indian coast and river systems are underutilized. The cost of coastal shipping, per tonne per kilometre, is much lower than that of roads or railways. Modi 2.0 is expected to serve as an international benchmark for multimodal transport, around 25 to 30% of the road, from 50 to 55% of the railways and a much higher proportion of 20 to 25% of the waterways.

In terms of public transport, the central government has asked for a hub and radio model to facilitate public transport. In logistics, the integration of different modes of transport with advanced technologies such as Blockchain modelling will save on the costs of multiple modal transport.

Also, the Tech Supply Chain Conference & Exposition | BOM Edition which is going to be held on 19th & 20th of September in Mumbai will emphasize on supply chain and logistics technology. Attendees will witness the practical implementation of AI, IoT, Machine Learning, AR/VR, and Humanoid Bots in supply chain, logistics and procurement domain. The 2 Day conference is pressed on achieving innovation, maximizing supply chain and logistics profitability and increasing visibility and flexibility to mitigate risk.

The Tech Supply Chain Conference & Exposition 2019 is supported by India Logistics. Shri. Suresh Prabhu, Minister of Commerce & Industry will be the Chief Guest at TSC2019 | BOM Edition.

With the Tsunami of Modi 2.0 logistics industry will surely see a massive boost and TSC2019|BOM Edition will provide a great platform for supply chain and logistics leaders and technology innovators to put forward their points and corrective measures on how technology will help the government in optimizing logistics and supply chain towards digitization.