Mapping a digital future for India’s Logistic sector

  • March 25, 2022
  • Blog

Digitalisation in every sector has fostered the development of better procedures and concepts. Logistics in India is one of the sectors that has been facing challenges due to lower digitisation, traditional methods and lack of synchronisation. Efficient logistics for any country is a major game changer as it involves movement of goods and services that in turn drives all other economic activities. India incurs much higher cost for logistics than other developed countries where it is about 7-9% of their GDP while for India it is 13-14% of the GDP.

Why should we even bother?

Higher costs of logistics creates massive impact on all kinds of businesses which leads to lower profits. This results into lower investments in the manufacturing businesses. Manufacturing business in India is still highly under developed and higher logistics costs make it worse. Investments tend to shift towards the service sector as they remain free from the logistical challenges.

A survey done by McKinsey and the Indian Institute of Logistics in 2019 suggests that major factors responsible for inefficient logistics in India include overburdened roadways and lack of technological advancement. The higher cost of logistics is a result of preference of roadways over rail and waterways as they have lower connectivity and synchronisation. The rates for roadways are higher than that for rail and waterways which increases costs.

Another hurdle in the Indian logistic sector is the lower technological advancement. Most of the companies are small sized businesses that do not have the infrastructure and capital to develop large scale warehousing facilities and inculcate tech based solutions. This makes logistics a time consuming, inefficient and an expensive affair for a lot of businesses.

Gati Shakti – The future

The Government of India has introduced the National Master Plan – PM Gati Shakti – for multi – modal connectivity in the Budget FY23. This is aimed at developing an efficient ecosystem for transportation across the country. This initiates digitalisation in the transportation sector with the use of data. The traditional methods and procedures were fragmented and were implemented by different ministries through different plans. Gati Shakti will now provide a single platform for all stakeholders and will bring all the pre-existing plans and projects on a single platform. Implementation and monitoring will become easier and far more integrated.

Gati Shakti also makes use of spatial planning with more than 200+ layers of GIS data. This ensures reduced geographical conflicts amongst different projects hence making the procedure seamless. Efficacious use of digital platform and data can create a system that would ensure optimum use of various modes of transportation. For
example, burden on roadways can be reduced by increasing the use of rail and waterways for larger distances. Roadways can be then used for last mile connectivity. Costs and timelines can be tracked and rectified.

Improving warehousing has also been a struggle. Gati Shakti provides a solution for large scale warehousing with a technological upgrade. The Multi-Modal logistics parks (MMLPs) form another major feature of this initiative. These would be the hubs connecting different modes of transportation and provide large scale warehousing.

These would make use of automation to reduce turnaround time and provide facilities like sorting and grading. This project is based on comprehensiveness, optimisation, synchronisation and analytical approach towards logistics sector.

The digital platform for the project is the Unified logistics interface Platform (ULP) that would reduce the manual work and would be open for all the stakeholders. Use of data from various other government bodies like Vaahan, GSTN etc. would make it a unified regulatory platform. This is a great initiative towards building a digital India, wherein logistics could play a strong role when optimised and efficiently utilised.