How ‘Make in India’ and ‘Move in India’ are driving India’s economic growth

The Indian logistics sector is estimated to hit the $350-380 billion mark by 2025. The take-off of ecommerce and D2C business models has been fuelling growth in the last two to three years.

How ‘Make in India’ and ‘Move in India’ are driving India’s economic growth

Saturday April 02, 2022,

5 min Read

Given the growing geopolitical uncertainties, improved access to technology, and insistence on self-reliance, the ‘Make in India’ campaign has certainly taken centre stage in the Indian startup ecosystem. For the success of Make in India, having an efficient logistics industry is a precondition.

As a famous Chinese military strategist once said, “The line between rapid economic growth and slow growth lies in logistics."

Logistics has been the backbone of economic growth. Whether it is the booming US post World War II, the resurgent Japan of the late 20th century, or the emergence of China in the last 30 years – all these economic spurts have been facilitated and augmented by a strong logistics sector.

A great example is how the usage of a container transformed the whole shipping industry and propelled growth in the consumer markets in the US and made Asia a manufacturing hub.

The key role played by logistics is the transportation of goods from producer to consumer, and in this process, it creates employment and spurs economic growth.

In today’s times of “just-in-time inventory” and “10-minute delivery”, logistics has become a far more important cog in the wheel.

Opportunities, challenges, and the master plan

Like any sector in the fast lane, the logistics sector faces as many challenges as opportunities.

One of the biggest bottlenecks besieging the sector has been fragmentation. While a lot has been written on fragmented ownership of fleet, the other fragmented aspect – warehouses – often gets left out.

It was important to have warehousing infrastructure concentrated in metropolitan trade hubs in the early days, but now with customers spread across the country, it is important to distribute the warehousing network and ownership across the country to bring competitiveness.

The other pain point has been poor infrastructure for road transport, even though it consists of almost 60 percent of logistical movements in the country. The adoption of technology-based solutions has certainly offered some comfort though.

The recent announcement of the National Master Plan for multi-modal connectivity – Gati Shakti – is certainly a boon for making the ‘Make in India’ drive not just a reality but success too.

The government is inclined on making India the next manufacturing hub for the world, and we see that intent in offering production-linked incentives for the auto sector, electronics and mobiles, and batteries to name just a few.

This has made companies and businesses seriously look at India as the new unified manufacturing base and market, which is fuelling the logistics sector as well.

First in line is the increased overlay and execution of new manufacturing facilities that have been a driving factor behind the ‘Make in India’ push. Its impact has started to show already. The cumulative FDI inflow in the country between 2014 and 2019 is almost 47 percent of the total FDI received by the country since 2000. For example, in the auto components segments, the turnover has gone up by 8.8 percent and exports by 22 percent.

Is this possible without efficient logistics and supply chain support? Certainly not.

But then can this be better? Certainly yes!

Dedicated freight corridor

The Dedicated Freight Corridors (DFCs) can be a game-changer in the way goods are going to be transported from production hubs to consumption/export hubs.

This quicker, cheaper, and more reliable way of transporting goods will contribute to bringing India’s inordinately high logistics costs down.

The DFCs are also catalysing the establishment of new manufacturing facilities along the corridor driving growth and employment in less industrialised geographies.

Efficiency is key

One of the major demands from manufacturing industries has been seamless access to markets, both domestically and globally. The logistics policy and Gati Shakti scheme will enhance efficiency by promoting seamless connectivity via these economic corridors, and Multimodal Logistics Park.

The introduction of GST has made India a unified market. This has brought time and cost efficiency to the logistics and supply chain sector. The transit time for goods transported by road has come down substantially, thereby reducing the costs by 18-20 percent.

Needless to say, to ensure the success of Make in India, the logistics sector is being aimed at transforming from a ‘point-to-point’ model to a ‘hub-and-spoke’ model, which is far more efficient.

Technology is providing scale and speed

Finally, the fourth industrial revolution is all about adopting digital technologies. Make in India has already enabled the manufacturing industries to adopt automation, IoT, big data, and cloud computing. All these digital technologies are now making their way to logistics as well.

The Indian logistics sector is estimated to hit the $350-380 billion mark by 2025. The take-off of ecommerce and D2C business models has been fuelling growth in the last two to three years.

In the post-COVID-19 world, the focus on import substitution, seizing the opportunity in exports due to countries willing to diversify their trade away from China, and the government’s reinvigorated push for ‘vocal for local’ –have all significantly benefited the logistics sector.

‘Make in India’ and ‘Move in India’ will surely complement each other, driving the economic growth of the country in times to come.

Edited by Kanishk Singh