5 factors acting as a catalyst for the growth of Indian logistics sector

The recent conference organised by ASSOCHAM titled “India on the cusp of a logistics revolution” saw diverse stakeholders – including policymakers, transport and terminal infrastructure service providers, and logistics service providers (LSPs) – converge on multiple issues that impact the sector.

The tripartite theme of the conference revolved majorly around the pre-eminence of end-to-end logistics integration, capacity expansion, effect of digital revolution, and the outlines and expediency of a comprehensive National Logistics Policy.

The total exports from India inscribed a growth rate of 3.20 pc year-on-year during April-August 2019 to $227.36 billion. On the other hand, the logistics and supply chain market in India is expected to touch $307 billion by the end of this year, growing at an average annual CAGR of 16 percent.

This shows that the logistics industry would be a vital enabler and catalyst for attaining the true growth potential of India.

Equipped with better stakeholder harmonisation, infrastructure investment, and enhanced operational efficiency, India can surely realise its dream of becoming an economic and logistical powerhouse.

So, here are five factors that are contributing to this trend and the growth of Indian logistics sector.

Logistics 4.0

India is today waking up to the dream of tech-driven integrated logistics. Over the past couple of years, structural reforms have drastically enhanced the logistics efficiency in India. For instance, Indian warehouses are now equipped with everything from IoT-devices to automated sorters and handlers, which considerably decrease the turnaround time (TAT) in in-house logistics operations.

On the other hand, initiatives like mandatory use of FASTag and the new Automotive Industry Standard (AIS-140) have made RFID tags and GPS/GSM trackers mandatory for all commercial vehicles. These developments, alongside others, are driving a superior tech infusion and becoming the harbinger of logistics 4.0 in India.

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Superior export prospects

With unconventional industries and prominent brands gaining access to Indian markets and establishing production facilities here, both domestic consumption and foreign exports are receiving a fillip at present.

The ongoing rift between China and the US has created an opportunity for India to plug the international supply chain gap created by Chinese export shortfall. The government is also simultaneously improving its manufacturing standards with policies like ‘Zero Defect, Zero Effect’ to aptly position India in the global scenario.

A better logistics infrastructure

With prominent stress being laid on fortifying and invigorating the Indian logistics paradigm, new and enhanced logistics centers and warehouses are being charted around eminent ports. Logistic parts and tailor-made spaces are proving to be beneficial at the same.

According to reports, the major ports of India are presenting affirmative growth indicators as nine important ports of the country have handled 3.11 percent more traffic from April 2018 to January 2019 as compared to its corresponding period of the previous year.

Strategic marketing

Armed with brilliant market strategisation and comprehensive cultural research, the country has boosted its bilateral trade prospects.

Recent events such as ‘Howdy Modi’ in the US and the global business forum, where PM Modi beseeched the international business goliaths to invest in India and optimise the existing technological talent, have greatly added to the staggering FDI inflows of $405.64 billion in the week up to March 15, 2019.

New-age technologies

With the rise in FDI inflows, the logistics sector is set to further invest and execute disruptive tech breakthroughs of our time such as deep learning, machine learning, IoT, and data analytics.

The ‘Make in India’ and ‘Digital India’ initiatives have also assayed a creditable part in the expansive growth process of the logistics and supply chain.

As per IDG’s 2018 State of Digital Business Transformation report, 89 percent of enterprises have deliberated on embracing these cutting-edge technologies and amalgamating them to renovate their logistics and supply chain units. This is being done to keep up with their international counterparts. This advanced tech optimisation has ushered vast transformation over the logistic landscape and accelerated profits

Improved trade policies

New and enhanced trade policies have also assisted in promoting bilateral trade and amplifying international business. Business conducive foreign trade policies such as the Merchandise Exports from India Scheme (MEIS) and the Service Exports from India Scheme (SEIS) have constructively harmonised the supply and logistics chain management, augmenting the production and manufacturing sector of the country.

The data released by the Commerce and Industry Ministry revealed that the exports, catalysed by the robust logistics and supply chain sector, reached a whopping $331 billion in 2018-19. Additional efforts for an enhanced bilateral trade by the Indian government have also led to a fall in the tariff rates and taxes by various nations.

(Edited by Megha Reddy)