Why is it in the news?
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As per a recent survey, the Indian logistics sector provides livelihood to 22 million-plus people, which is expected to be over 40 million by 2020.
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The high rate of growth in the next couple of years is expected largely due to implementation of GST.
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India has moved from the 54th position in 2014 to 44th in 2018 in the World Bank’s Logistics Performance Index.
More in the news
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GST has replaced at least 7 indirect tax heads and has eliminated the need for warehouse hubs across States.
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Further, GST has eliminated check posts across the nation and thereby waiting time, leading to at least 12-15% reduction in the turnaround time of trucks.
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Considering the double-digit growth, the logistics market would exceed $250 billion in the next two years.
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Better utilisation of assets like vehicles and warehouses will lead to efficiency and increased productivity thus lowering overall cost.
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This would considerably benefit the supply chain directly and India’s growth indirectly.
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Post GST, there is a marked improvement in the use of technology and digitization by logistics players.
Logistics costs
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Logistics costs have been one of the biggest stumbling blocks for Indian manufacturers eyeing exports.
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At about 13-14% of GDP, India’s logistics cost is high, and compares with about 8% in advanced nations.
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This despite the percentage of outsourcing being higher in developed markets.
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The Centre has made clear its intention to bring down this cost to less than 10%, which would make Indian manufacturers globally relevant.
Infrastructure Status
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The infrastructure status to the sector was conferred in November 2017.
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Infra status is helping the sector avail cheaper finance (2% lower) for its warehousing and cold storage needs.
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This will bring in a lot more players with an integrated service approach that would again help Indian manufacturers.
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New investments in this sector is good news as it could create a lot more jobs in the near future.
Source
The Hindu.