Highlights of Transportation and Logistics Ecosystem in India
- Transportation and logistics sector is huge in India. This is true for its market size, geographical reach, variety of modes of transport, types of transportation services, and the number of shippers involved in supply chains worldwide.
- Logistics costs account for approximately 14% of India's GDP, which hampers its competitiveness, particularly in the manufacturing sector, compared with competing countries. Logistics efficiency with help control the domestic prices as well as boost export competitiveness. LEADS 2023 report further highlights the roles of all stakeholders.
- Prime Minister Gati Shakti, also known as National Master Plan for Multi-modal Connectivity is an Indian megaproject worth Rs 110 lakh crore ($1.2 trillion USD) to provide competitive advantage for manufacturing in India. PMGS spending is about one third of the size of India’s economy - Rs 296 lakh crore ($3.57 trillion USD) over next years.
- PM Gati Shakti - National Master Plan is launched for Multi-modal Connectivity, essentially a digital platform to bring 16 Ministries including Railways and Roadways together for integrated planning and coordinated implementation of infrastructure connectivity projects. The multi-modal connectivity will provide integrated and seamless connectivity for movement of people, goods and services from one mode of transport to another. It will facilitate the last mile connectivity of infrastructure and also reduce travel time for people.
- PM Gati Shakti is based on six pillars: Comprehensiveness (planning through one centralized portal), Prioritization (prioritize projects through cross-sectoral interactions), Optimization (assisting different ministries in planning for projects after identification of critical gaps), Synchronization (avoid silos and improve coordination in planning and implementation of the project), Analytical (provide entire data at one place with GIS based spatial planning and analytical tools), Dynamic (all Ministries and Departments can visualize, review and monitor the progress of cross-sectoral projects).
- PM Gati Shakti incorporates the infrastructure schemes of various Ministries and State Governments like Bharatmala, Sagarmala, inland waterways, dry/land ports, UDAN etc.
- Indian Railways aims to increase its freight traffic from 1.1 billion tons to 3.3 billion tons.
- India's aviation industry has experienced significant growth in the past 9 years. The number of operational airports in the country has doubled from 74 in 2014 to 148 in April 2023. Freight traffic on airports in India has the potential to reach 17 million tones.
- India has one of the largest road networks of approximately 42.36 lakh kms. 60% of the total freight and 87% of passenger traffic is carried by Indian roads.
- India's ports handles about cargo of 795 million tonne through 13 major ports.
- Unified Logistics Interface Platform (ULIP) is designed for application programming interface (API) to provide real time information to all stakeholders.
- Multimodal Logistics Parks at various locations are under development for improving the multi-modal connectivity.
- 100 PM GATI SHAKTI cargo terminals are under development for multimodal logistics.
India is witnessing rapid urbanization and digitization which demands seamlessly satisfying the needs of consumers by e-commerce and retail sectors. In addition, logistics has a highly pivotal role to play in addressing the societal challenges such as healthcare delivery, food security, humanitarian logistics, equitable distribution of resources with improved resilience for a rising market uncertainties. Logistics efficiency of the nation determines the holistic development of the economy and society which ensures sustainable development, business competitiveness, inclusivity, and resilience. To realize this, logistics sector requires highly skilled workforce to execute the various function such as transportation, packaging, data-driven decision making, cold logistics, warehousing etc. most effectively. The logistics sector is estimated to grow to the tune of $215 billion by 2022, at a CAGR of 10% (India's Logistics Market, 2020 Research Report).
Logistical services such as warehousing, transportation, packaging, supply chain solutions etc. significantly improves the competitiveness of supply chains across the sectors. It has been reported by Logistics Sector Skill Council that the logistics sector employs around 22 million people, of which a large proportion is made up of partially skilled, or unskilled workers. Last two decades has witnessed an exponential growth of e-commerce and domestic manufacturing which has given logistics sector a significant boost. This growth is enabled by a number of factors, such as increased foreign direct investment, rapid investment in mega infrastructure projects, evolving logistics regulatory policies, growth of cold-chain markets, increase in consumer demand and digitization of supply chains. The pandemic and the ensuing transitions in the commercial space has also brought about a digital transformation across the logistics supply chain. This can give a significant boost to employment in India. For example, in the U.S., logistics activities represent approximately 9.9% of all dollars spent on goods and services. This translates into 10,000,000 U.S. logistics jobs. India has a huge potential to generate employment in Transport and Logistics sector (next to agriculture) to meet demands of highly diverse markets. It is estimated, by Teamlease services, that logistics sector in India has a potential to create about 10 million additional jobs by 2027.
An effective logistics and supply chain is a backbone of India’s growing economy and plays a crucial role in addressing the requirements of global market. India with expanding middle class market and changes in consumer behaviour patterns has significant domestic demand to cater, along with renewed focus on exports. It is vital to improve supply chain competitiveness through the integrated development of all the functions such as transportation, warehousing, inventory management, packaging and logistics information.
Atmanirbhar Bharat (Self-Reliant India) is a mission to make India a global manufacturing hub and a leader in innovation. It is announced to boost the economy, focusing on health, MSME, and agriculture sectors. The key features of Atmanirbhar Bharat include:
- Relaxation of FDI norms in manufacturing, telecommunications, and financial services.
- Incentives for domestic manufacturing, including tax breaks, subsidies, and access to credit.
- Support for startups and SMEs through initiatives like Startup India and Pradhan Mantri Mudra Yojana.
- Initiatives to promote exports, such as MEIS and EPCG scheme.
- Emphasis on developing critical technologies, localization of manufacturing, and strengthening the agricultural sector.
- Commitment to promoting innovation and entrepreneurship as part of the Atmanirbhar Bharat Abhiyan, with its full impact yet to be observed as the initiative is in its early stages.
The initiatives under Atmanirbhar Bharat focuses on significant investments in infrastructure projects for improving the quality of infrastructure and hence competitiveness of manufacturing sector through efficient supply chain and logistics. This demands triple-fold approach involving -
a) Development of state of the art infrastructure
b) Policies to ensure optimal utilization of the infrastructure
c) Skilled manpower to ensure effective utilization of the infrastructure and implementation of policy regulations
As part of the celebrations of 75 years of Independence (Azadi Ka Amrit Mahotsav), Honourable Prime Minister Shri Narendra Modi announced that the Centre will launch ‘PM Gati Shakti Master Plan,’ and PM Gati Shakti was launched formally in October 2021 with an ambitious goal to develop “holistic infrastructure” by allocating a huge budget of Rs. One hundred lakh-crore for multimodal transportation in India. It is designed as a National Master Plan for Multi-modal Connectivity, a digital platform to bring 16 Ministries, including Railways, Civil Aviation, MEITY, Shipping, and Road Transport, together for integrated planning and coordinated implementation of infrastructure connectivity projects. As per the Government of India, the Gati Shakti scheme is based on six pillars - comprehensiveness, prioritization, optimization, synchronization, analytical, and dynamics.” PM Gati Shakti to generate multiple employment opportunities cut down on logistics costs, improve supply chains and make local goods globally competitive”. PM Gati Shakti operates with a focus to improve project execution visibility, controls cost and scope overruns, and enhances multimodal connectivity to reduce logistics cost. National Logistics Policy (NLP) was launched in September 2022 to focus on logistics efficiency through technology adoption. NLP puts emphasis on leveraging skilled manpower and best-in-class technology for an efficient logistics network. The various recent initiatives taken by Government and Industries for improving the infrastructure and eco-system of logistics in India has surged the demand for skilled manpower in logistics sector in India. This has two-fold advantage. One hand, it has an immense potential to generate gainful employment in the logistics sector and on the other hand, it will reduce logistics costs through elimination of inefficiencies in the sector.
The logistics functions are labour-intensive and employs nearly 22 million people. It has been reported by Logistics Sector Skill Council that only 4.7% are formally skilled, while a majority of the manpower remains unskilled or partially skilled. In view of the significant investments in this sector, there is an urgent demand for skilled workforce to meet the growing demand for infrastructure (physical/ IT), services and policy reforms. While logistics has been identified as one of the top-five employment-generating sectors, it is expected that the transportation and warehousing industries alone will employ over 25 million people. In particular, there is an emerging need of creating highly skilled manpower for following key areas:
- Land Transportation
- Warehousing
- Air cargo operations
- Courier and Mail services
- Terminals, ICDs & CFSs operations
- Exim Logistics, Freight Forwarding, & Custom Clearances
The initiatives for skill development in logistics sector are taken by various institutions, such as the National Institute of Logistics and Material Management CII-Institutes of Logistics, Tata Driving Schools, IIM Mumbai etc. However, the demand for skilling in the logistics sector is huge and demands dedicated institution to look after the emerging requirements on the sector and hence skilling of the people in a more integrated and holistic manner. In this regard, Government of India has established Gati Shakti Vishwavidyalaya (GSV) which is India’s only University in Transportation and Logistics sector. This Central University is sponsored by the Ministry of Railways, (Govt of India) and offers logistics and transportation-focused applied education, training, skilling and research through experiential learning, multi-disciplinary research, and academia-industry interface to build quality manpower. The University is contributing to the ecosystem of transportation and logistics with a unique vision “Innovation-led, Industrydriven University for creating, assimilating and imparting excellence of knowledge and actions accelerating development in the transport and logistics sectors”. The University is mandated by Government of India to design, develop and deliver the courses in multimodal logistics covering all modes of transport (Rail, Road, Air, Water) with a focus on all three dimensions - Infrastructure (Technology), Services (Management) and Regulatory Reforms (Policy) boosting the performance of logistics sector in India.
GSV has a unique role to play in-terms of creating highly skilled manpower through skilling, upskilling and reskilling in the transportation and logistics sector to enable Nation’s aspiration to reduce its logistics cost from present 14% to 8-9%. Transportation sector is a growth engine for India which contributes roughly 6.3% of GDP of India. The University offers demand driven curriculum including technology, infrastructure and management dimensions to strengthen the eco-system of multi-modal transportation and logistics in the country. India has shown a significant improvement in Logistics Performance Index and Ease of Doing Business during last few years. This is attributed to competitive government policies and focus on “Make in India” program. India has also undergone a rapid digital transformation in all sectors with usage of Aadhar based identification, UPI payments, Digital India Initiatives etc. The PM Gati Shakti Master Plan announced in 2021 with its unique projects such as Bharatmala, Sagarmala, Parvatmala, Dedicated Freight Corridor and others intends to leverage the competitiveness of logistics sector in India. GSV is positioned to strongly support the growth and developments in the eco-system of logistics and supply chain in India.
GSV has designed unique programs in-line with its vision (“innovation-led, industry-driven”) for both regular students and working professionals considering the emerging requirements of transportation and logistics sector. The program for working professionals are structured in hybrid mode (off-line & online) to best facilitate the working professionals in transportation and logistics sector. GSV looks after the skilling and training requirements for the logistics sector through various programs at UG, PG and executive levels.
GSV is mandated to work across the entire transportation and logistics sectors viz. railways, shipping, ports, highways, roads, waterways, aviation, etc. Apart from regular education programs, the GSV offers executive training for Indian Railways/Government officers and Corporates in technology, management and policy domains of transportation and logistics. It follows a demand-driven curriculum while leveraging state of the art infrastructure of all the Centralized Training Institutes of Indian Railways.
With a vision to be an “Industry-driven and Innovation-led” university, GSV has a very strong focus on collaborations with leading institutions and industries across the world. Within the first year of its formation, it has entered into important MOUs with AIRBUS, DPIIT (Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry), Nippon Koi, CILT as well as leading institutes like IIM Mumbai, Indian Maritime University, BITS Pilani, IIT Gandhinagar and IIT Jodhpur. It is also closely working with the entire Logistics Ecocystem and sector skill councils. Through MOUs with DPIIT and Karmayogi Bharat, GSV is mandated as “Central Nodal Agency across India” to train civil services officers in Logistics and PM Gati Shakti.
It has been projected that India's population will reach 1.6 billion by 2030 and 1.8 billion by 2050 which will have 63 percent of working age young people (15-64 years) compared to China with working age group of 54 percent. This demographic dividend gives India a significant edge over other emerging economies. This makes India an attractive destination for foreign businesses looking to expand their operations globally and tap such an immense potential of growing consumer markets in India. This also comes with a challenge to impart adequate skills to this large proportion (about 63 percent) of working group and convert them into a future ready highly skilled workforce for sector specific challenges in both manufacturing and service organizations. In order to ensure the availability of highly skilled workforce for the transportation and logistics functions in both manufacturing and service organizations, Gati Shakti Vishwavidyalaya (GSV) is established and mandated by Government of India to design, develop and deliver the courses in multimodal logistics covering all modes of transport (Rail, Road, Air, Water) with a focus on all three dimensions - Infrastructure (Technology), Services (Management) and Regulatory Reforms (Policy).
Viksit Bharat, or Developed India aspires for the combination of social changes, technical innovations, and economic reforms. This vision has many components, from economic growth to all-inclusive development and imbibing technological innovation. It intends to enable every citizen to participate in the economy characterized as strong, inclusive, and full of job and entrepreneurial opportunities. This entails implementing policies to encourage investment, advance economic growth, and foster innovation across various industries. The government has taken various initiatives such as Made in India, Digital India, and Startup India. The crucial component of Viksit Bharat's vision is to develop world-class infrastructure to promote sustainable growth (greener and cleaner India) and improve everyone's standard of living. The initiatives place prime focus on harnessing technology to enhance efficiency and transparency in governance. GSV is established with an objective to facilitate the initiatives of Viksit Bharat by creating a highly skilled workforce for transportation and logistics sector which can contribute effectively in the large-scale infrastructure projects under PM Gati Shakti Master Plan like Bharatmala, Sagarmala, Udaan, Dedicated Freight Corridor, High Speed Rail, etc. To vocalize the dream of Viksit Bharat 2047, GSV through teaching, training and skilling imparts competencies in the advanced areas of transportation such as M2M Communications in Transport, Electric Trucks, Intelligent Public Transportation, Self-Driving Automobiles, and High-Speed Rail Networks for making the graduates contextually relevant for the sector. GSV offers outreach programmes in the domain of logistics and transportation to enhance the skills and competencies of the professionals in the logistics sector.
Today’s organizations have access to a new world of resources as a result of globalization. However, companies have had to expand their capabilities beyond their traditional boundaries to rely on extended networks in order to capture these new gains. To keep pace with the ever changing demand, companies have to work on lot of operations and distributions hurdle which are not easy. For example, Blinkit (formerly Grofers) has started a 10 minutes groceries delivery which changed their logistics requirements and supply chain strategy from a wide-spread to focused market distribution. The emerging challenges in transportation and logistics sector demands highly skilled workforce equipped with adequate skills and competencies to ensure effective execution of logistics related activities.
A modernized and efficient supply chain in India will improve the ease of doing business, scale down the costs of manufacturing, and accelerate rural and urban consumption growth due to better market access. The supply chain industry has a cascading impact on almost all aspects of trade and retail. India’s aspiration to become a global manufacturing powerhouse and the government spotlight on ‘Make in India’ compels nationwide supply chain reform, prompting several federal and state-based schemes and investment incentives. An effective supply chain demands competitive development of all the functions such as transportation, warehousing, inventory management, packaging and logistics information. This can give a significant boost to employment in India. It is time for India to strengthen the key elements of supply chain by addressing select critical questions as follows.
1. What are the next decade supply chain skills and technological solutions required with the advancements in the domain of mobility like electric vehicles, hydrogen fuel, autonomous vehicles, 5G enabled IoT solutions etc.?
2. What are the implementation challenges in Comprehensive Logistics Action Plan (CLAP) in NLP2022 to improve coordinated planning, real-time information sharing, standardization and predictability across various ministries/ departments dealing with logistics in India?
3. What are the policy interventions necessary to attract participation of private player in the development of logistics parks in India?
4. How to ensure the optimal utilization of brownfield Logistics Parks by encouraging alternative use at the same facilities, developing standards to drive interoperability, etc.?
5. What are the cyber security solutions and policies being to be developed in India to mitigate the associated attacks? How effectively IoT and block chain can be used in India to check the movement and condition of products across the supply chain?
In a fast-changing technology world, where knowledge-based economies are expected to outperform traditional economies, GSV looks forward to work with Industry partners in “co-development” mindset to create new technological solutions, creating technology testbeds, preparing superior human resources by “Skilling, Upskilling and Reskilling” approach to radically transform the whole logistics and supply chain sectors. The role of platforms like “Logistics Insider” becomes quite important in the mission.
This white-paper is contributed by Prof. (Dr.) Manoj Chaudhary and Prof. (Dr.) Jitesh Thakkar from Gati Shakti Vishwavidyalaya, Vadodara, Gujarat.
