India’s Logistics Transformation

From High-Cost Bottleneck → Globally Competitive Advantage

---

1️⃣ Importance of Logistics for India

• India’s economy is highly manufacturing and trade dependent

• Logistics influences:

  • Cost of products

  • Export competitiveness

  • Job creation in supply chain

  • Foreign investment

  • Integration into Global Value Chains (GVCs)

• Target under National Logistics Policy (2022):
  → Reduce logistics cost to < 8% of GDP
  → Make India a top-25 country in global logistics performance index

---

2️⃣ New Scientific Estimate of Logistics Cost

Source: DPIIT + NCAER Hybrid Assessment (2024)

Parameter	Value
Logistics Cost as % of GDP	7.97%
Logistics Cost as % of Non-Service Output	9.09%
Total Logistics Cost	₹24.01 lakh crore

Why important?

• Previously 13–14% estimate → overestimated → discouraged investors

• Accurate data helps:

  • Correct policy focus

  • Global trade comparison

  • MSME supply-chain reforms

Insight: Small firms pay disproportionately higher costs → hampers their competitiveness.

---

3️⃣ Structural Changes in 2025

The government has launched 6 powerful new-generation reforms:

---

(A) PM GatiShakti – Integrated Infra Planning

• Uses GIS-based National Master Plan

• Breaks silos between 16+ ministries

• Key recent developments:

  • ✔ District Logistics Master Plans in all 112 Aspirational Districts

  • ✔ Offshore planning portal → for wind farms & coastal projects

  • ✔ PM GatiShakti Public → 230 datasets available for private sector

  • ✔ NMP Dashboard: monitoring & data-driven planning

Goal:

Right infra in right location → avoid duplication → lower time & cost

---

(B) SMILE – State & City-Level Logistics Plans

Strengthening Multimodal & Integrated Logistics Ecosystem

• Pilot in 8 major cities (urban + peri-urban freight)

• Focus areas:

  • Smart last-mile delivery

  • Urban congestion reduction

  • Low/no emission vehicles

  • Freight included in city mobility plans

  • Peripheral truck terminals & warehousing

Outcome:

Systemic integration → Clean & efficient city logistics + job creation

---

(C) LEADS 2025

Logistics Ease Across Different States

• Ranking states on:

  • Infrastructure

  • Regulatory framework

  • Digital services

  • Sustainability

  • Operating environment

• Objective data weight: 32.5% (set to rise)

• Uses corridor performance monitoring:

  • Real-time truck speeds

  • Bottleneck mapping

  • Delay alerts

→ Competitiveness race among states

---

(D) LDB 2.0 – Visibility Drives Efficiency

• Real-time container visibility

• Tracks via:

  • Container Number

  • Vehicle Number

  • Rail FNR Code

• Heatmaps show delay zones

→ Predictive logistics + avoids detention costs

---

(E) IPRS 3.0 – Industrial Park Rating

• Category certification:

  • Leaders

  • Challengers

  • Aspirers

• Rating on:

  • Logistics connectivity

  • Sustainability

  • Digital readiness

  • Tenant experience

NICDC plug-and-play parks:

• 20 planned, 4 completed, 4 under construction

→ Investors get reassurance → improves Ease of Doing Business (EoDB)

---

(F) HSN Code Mapping

• 12,167 HSN codes mapped to 31 ministries
  Benefits:

• Faster clearances

• Sector-wise policy accountability

• Stronger negotiation in FTAs

---

4️⃣ Multimodal Logistics – The Game Changer

India shifting from Road-heavy (60% cargo) → Rail + Waterway-led model

---

Case Focus: Gangetic Plain Corridor

✔ Eastern Dedicated Freight Corridor (DFCs)

✔ Ganga Waterway (NW-1)

✔ Varanasi Multimodal Terminal

Impact of EDFC:

Benefit	Old	New
Wagon turnaround	15–16 days	2–3 days
Delhi-Kolkata freight time	>60 hrs	35–38 hrs
Rail congestion	High	Major relief

• Command centre: Prayagraj

• Investments:

  • $1.96 billion – EDFC & Rail Logistics

  • $375 million – Ganga Waterways

→ Rail–River integration cuts emissions, fuel & logistics cost

---

5️⃣ Technology as the Backbone

Tech Platform	Benefit
ULIP	Single logistics data ecosystem
FASTag	Transit time ↓ at toll plazas
e-Way Bill	Standardized compliance
RFID / IoT	Real-time tracking
5G & AI	Automated route optimization
e-INVOICING	Auditability & transparency

---

6️⃣ Impact on Economy

Parameter	Impact
Manufacturing	Competitive pricing → More exports
MSMEs	Fairer freight rates & visibility
Jobs	Millions in warehousing + cold chain
Environment	Modal shift reduces emissions
Urban	Decongestion + fast deliveries

---

7️⃣ Remaining Challenges

• Logistics still fragmented

• Last-mile rural connectivity needs improvement

• High rail/hinterland cargo handling cost

• Lack of uniform warehouse standards

• Digital adoption by small operators is slow

→ Next phase focus: MSME inclusion + rural linking

---

Exam Sections

---

🔹Prelims Pointers (Must Memorize)

• Logistics cost: 7.97% of GDP

• ULIP = API-based integration of logistics systems

• LEADS vs IPRS vs SMILE distinctions

• EDFC connectivity to NW-1 (Varanasi–Haldia)

• LDB 2.0 multimodal tracking (rail + road + sea)

• 112 Aspirational Districts logistics master plans

---

🔹Mains Answer Framework (150 words quick notes)

“Logistics acts as the spinal cord of India’s economic structure…”

I can provide a perfect model Mains answer if you want.

---

🔹Practice MCQs (Updated Style)

1️⃣ Consider the following:

1. HSN code mapping enhances accountability in logistics policy.

2. LEADS 2025 ranks industrial parks.

3. SMILE integrates urban freight into city planning.

Correct options:

(a) 1 only

(b) 1 and 3 only ✔

(c) 2 and 3 only

(d) 1, 2 and 3

2️⃣ In the context of multimodal logistics:

Which pair is correctly matched?

Project	Related Feature
EDFC	NW-1 connectivity
LDB 2.0	Ranking parks
IPRS 3.0	Container tracking

Answer: (a)