As India charts its course towards becoming a global economic powerhouse, the logistics sector emerges as a critical driver of this ambition. The efficient movement of goods and services across the country and beyond its borders is not merely a facilitator of economic growth but a fundamental catalyst. To truly unlock its potential and achieve the status of a ‘Viksit Bharat’ by 2047, India will have to continue its logistics revolution by focusing on four key areas—continuing the focus on infrastructure development, outsourcing and development of 3PL and 4PL service providers (3PL or third-party logistics manages tasks like transportation, warehousing and order fulfillment for businesses, and 4PL or fourth-party logistics oversees the entire supply chain, coordinating multiple 3PLs and providing strategic management), optimum utilisation of assets and usage of Digital Public Infrastructure (DPI).
Leveraging the infra backbone: The focus on infrastructure development is already setting in motion the logistics revolution. The government has demonstrated its strong commitment through the implementation of various initiatives like the Bharatmala Pariyojana, the Dedicated Freight Corridor project and the Sagarmala scheme. These projects aim to create a seamless, multimodal transportation network that will significantly reduce logistics costs and improve efficiency.
Recent budgets have consistently allocated substantial funds for capital expenditure, with a focus on infrastructure development. The 2024 budget alone allocated Rs 11.11 lakh crore. This investment has a multiplier effect on the economy, benefiting various sectors, including logistics and supply chain operations. In logistics, this will help in reducing the turnaround times in road and other sectors which will help in reducing lead times, especially, for perishable goods. In the shipping sector, for example, the turnaround time has significantly reduced to 2 to 3 days but in order to be world-class, we need to be better than the USA at 1 day and Japan at 0.32 day.
Outsourcing and asset utilisation: For India to emerge as a global power and achieve a best-in-class supply chain, outsourcing must be executed as effectively and cost-efficiently as possible. And 3PL/4PL players aggregate demand, benefit from economies of scale and provide tech-based digital solutions which are flexible and scalable. The truck capacity utilisation in India in percentage terms is still way lower than the advanced economies and transportation is the starting point of outsourcing itself!
Outsourcing is also key to increased utilisation of assets. The infrastructure developed for logistics needs to be utilised at capacity, which can be achieved effectively by aggregating activities through 3PL/4PL players. This increased throughput reduces the cost of doing business while also reducing the carbon footprint.
Digital Public Infrastructure—driving efficiency and innovation: A crucial pillar of India’s logistics revolution is the adoption of advanced technology and the effective use of DPI. Embracing cutting-edge technologies is essential for optimising logistics operations and maintaining competitiveness. Leveraging digital know-how can turn the logistics sector into a key differentiator, solidifying India’s position as a global power.
Utilising the rich data available through the ULIP (Unified Logistics Interface Platform) portals, e-way bills and GST data points and using new-age technologies will lead to significantly better outcomes through route optimisation, network planning and inventory management to further facilitate efficiencies across the entire supply chain.
Supporting small-scale operators: The fragmented nature of India’s logistics sector, largely run by small-scale operators, can be advantageous. These operators focus on cash generation for their livelihood and growth, and at the same time help reduce delivery costs. Large companies should harness these small-scale players, integrating them into the global supply chain via technology and data linkages. This integration will help small operators access logistics infrastructure and DPI for effective service delivery in small towns and rural areas.
Enabling the transformation: India’s journey from a $30 billion economy in 1947 to the current $3.9 trillion (Rs 327 lakh crore), ranking as the 5th largest economy in the world, is a testament to its potential. To become a global power and supply chain hub, the country has to leverage its unique strength of the digital backbone, the rich data collected and being further augmented daily to leapfrog over even developed countries and make logistics a differentiator for India in the years ahead.
To fully capitalise on this opportunity, continued investment in infrastructure, increased data visibility, and optimised use of DPI and assets are essential. By focusing on these key areas, India can create a world-class logistics sector that not only reduces costs and improves efficiency but also provides a competitive edge in the global marketplace. As we progress towards Viksit Bharat 2047, a robust and efficient logistics sector will undoubtedly be one of the key drivers propelling us towards our goal of becoming a global economic powerhouse.
India has all the essential elements ready to be a global powerhouse and it is a rare confluence of opportunities coming together to provide the tailwinds for the next few years and the logistics sector and companies should utilise this for their benefit and the nation’s advantage.
The author is Chairman, TVS Supply Chain Solutions
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