The logistics industry in India has been on a continuous growth journey over the past few years. Witnessing a steady mix of ups and downs, the sector has been evolving rapidly, embracing newness each time, to emerge as the lifeline of the Indian economy in a true sense. Being a key enabler of multiple other industries operating in the country, the advancement of the sector is critical to ensure an overall growth of the Indian economy. According to a recent study, India’s logistics sector, currently valued at $160 billion, is expected to grow at a CAGR of 10% to $215 billion by 2022.

Unarguably, a flurry of structural reforms introduced over the last few years have enhanced and propelled the efficiency of the sector multi-fold. However, the outbreak of Covid-19 adversely impacted its operations, leading to a crisis of a kind. At the same time, the unanticipated pandemic also brought into light the various loopholes existing in the logistics industry that exposed its vulnerability and brought the operations to a halt.

Of course, the need of the hour is to address these glitches and to ensure uninterrupted logistics operations in the country. The sector looks forward to some significant reforms being introduced by the Indian government, which could make it more resilient, innovative, and sustainable in the future. Hopes are pinned on the proposed logistics policy by the centre which could well stimulate the sector’s growth and lead it towards a path of transformation. A study predicts annual investments in the logistics sector to reach $500 billion by 2025. The recent stimulus package of ₹1.5-lakh-crore announced by the government to strengthen logistics is a positive step in this direction.

Moreover, needless to say, a greater focus on digitalisation and technology adoption across the logistics value chain can create enormous breakthroughs. Emerging technologies such as artificial intelligence, machine learning, blockchain and IoT can be a game-changer in building a strong logistics foundation, and therefore, investments to facilitate their adoption must be deemed as necessary. Setting up of modern automated warehouses which are equipped with next-gen IoT devices and other upgraded technology can smarten up the warehouse operations while also reducing the associated costs.

Mounting Costs

Talking about the mounting logistics costs which have been a grave matter of concern for the industry, some innovative measures to control them are important. Costs associated with customs and border clearance, warehouse management, etc have been affecting the competitiveness of Indian products in the overseas markets. According to the Ministry of Commerce & Industry, India currently spends about 14% of its GDP on logistics, whereas the spend of other countries, namely Japan and USA, is comparatively low, being at 11% and 9-10% respectively. The government aims to bring down these costs from 14% to 10% by 2022, and the industry awaits the introduction of a streamlined approach to achieve the same.

Apart from this, measures like GST implementation, grant of infrastructure status to logistics, setting up of a Logistics division under the Department of Commerce can lead to an integrated development of the industry. Effective implementation of the proposed policy can improve the country’s trade prospects and, in turn, its ranking in the Logistics Performance Index.

Having said this, the post-pandemic phase is critical for the development of the logistics industry. Undoubtedly, a greater focus on digitisation and globalisation is set to increase the demand for logistics in the near future. The sector, which has been witnessing an annual growth rate of 10% is bound to grow even more stronger. The challenge is to implement the good practices within the given timelines along with an emphasis on improving the quality of work and human resources in the sector. The promise must be to deliver that hope and to put the industry on the path of continuous advancement.

Views are personal. The author is COO, Spoton Logistics.

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