The Economic Advisory Council to the Prime Minister constituted a Logistics Development Committee under the Chairmanship of Dr. Bibek Debroy. The committee was tasked to assess key challenges in logistics development and associated commerce and suggest policy reforms for ease of doing trade in India.
Background
Logistics play a vital role in economic growth. Efficient and cheap logistics is prerequisite to become globally competitive. However India has a high logistics cost which renders Indian Economy less competitive.
As per the Economic Survey 2017-18, the Indian logistics sector provides livelihood to more than 22 million people and improving the sector will facilitate 10 % decrease in indirect logistics cost leading to the growth of 5 to 8% in exports.
Survey estimates that the worth of Indian logistics market would be around USD 215 billion in next two years compared to about USD 160 billion currently. However logistics cost in India are 13-14% of GDP which is highly uncompetitive compared to world average of 9%.
Therefore, the Government is determined to implement more reforms to create a smooth and an efficient environment across the logistics value chain.
Draft National Logistics Policy In light of the report of the Logistics Development Committee, Draft National Logistics Policy is prepared by the Department of Logistics, Ministry of Commerce and Industry in consultation with the Ministries of Railways, Road Transport and Highways, Shipping and Civil Aviation. There is need that the four Ministries and their departments must leverage existing infrastructure to support each other in the logistics chain which will help in maximizing capacity utilization and reduce costs.
Thus, this policy provides a direction to make India globally competitive in logistics cost. |
Recommendations
Create an independent department to focus on logistics by overhauling Logistics Division under Ministry of Commerce and Industry
Impact
Identifies the bottlenecks of logistics in India.