India’s logistics market to be $307 billion by 2020

The Dollar Business Bureau

India’s logistics market is estimated to be worth $307 billion by 2020, stated the Minister of State for Drinking Water & Sanitation, Ram Kripal Yadav on Wednesday.

The country spends about 14.4 percent of its Gross Domestic Product (GDP) on transportation and logistics as compared to below 8 percent spent by other developing nations, said Yadav at a conference organised by the ASSOCHAM (The Associated Chambers of Commerce and Industry of India).

The Minister said that the creation of dedicated corridors for rail freight will support effective haulage of cargo containers by rail. The key benefit of the dedicated corridor is that freight trains could run on the basis of time tables just like passenger trains, and the frequency of trains can also be theoretically improved to one in 10 minutes. This will lessen the time for transportation of goods from the current 60 hours to 18 hours between the route of Mumbai and Delhi.

“Waterways are 50 percent cheaper than roadways and about 30 percent cheaper compared to railways. Besides being more fuel efficient, the coastal leg can also transport bigger parcel sizes and offer better opportunity for loads consolidation,” said Yadav. 

The Government’s plan to replace the NMDP (National Maritime Development Program) with the Maritime Agenda 2010–2020 is in sync with its aim to enhance the capacity of ports. It aims to promote private investment in major as well as non-major ports and bring performance of ports at par with global standards. The government, through this programme, is planning to invest Rs.2,870 billion in creating combined capacity of port of 3,200 MMT and to serve the expected traffic of cargo of 2,500 MMT by 2020.

Yadav said that India’s Cargo and Logistics Industry can be expected to grow at 16 percent CAGR, in the next few years with an influx of fresh investments that in turn will generate new opportunities for the logistics sector.

“But, this can only happen with the support of a sound and effective infrastructure. Though India is enhancing its infrastructure in spite of the slow economic growth in the last 10 years and with the appearance of a huge middle-class market with rising purchasing power, some sectors still need to come in line with other countries to keep pace with the development happening in other parts of the globe,” he said.

The minister said that proper changes in policy, opening up the capacity and enhancing the speed of goods in all modes of transportation, specifically in rail and water transport, is vital for the growth of the logistics industry.

He suggested that Logistics Service Providers should get access to cheap capital for infrastructure investment, facilitating them to expand credit periods to their customers and increase their working capital. And for that to happen the government should develop a uniform structure for tax and remove multiple check points and documentation needs, which would help in speedier cargo delivery.

“The growth of Cargo and Logistics industry will not just contribute to the GDP, but will also create opportunities for employment,” he added.