Introduction
India's logistics cost is estimated at around 7.8% to 8.9% of GDP according to NCAER-DPIIT estimates, which remains higher than developed economies and undermines export competitiveness. Ranking 38th on the World Bank's Logistics Performance Index (2023), India faces significant friction in international trade due to supply chain inefficiencies and infrastructure gaps.
Key Bottlenecks in India's Logistics Sector
The high transaction and transportation costs of Indian exports stem from structural, physical, and regulatory inefficiencies:
- Skewed Freight Modal Mix: Roads carry approximately 65% of domestic freight despite costing around ₹3.78 per tonne-km, while cheaper and more eco-friendly railways handle only ~27% (costing ₹1.96 per tonne-km) and inland waterways account for under 6%.
- Infrastructure Deficits and Inadequate Connectivity: Sub-optimal first- and last-mile connectivity to ports, dry ports, and industrial corridors causes severe congestion and inflates vessel and truck turnaround times.
- Fragmented Warehousing: Over 85% of warehousing remains unorganized, characterized by small, sub-scale facilities lacking automation, modern cold storage, and standardized material handling systems.
- Departmental Silos and Regulatory Red Tape: Disconnected planning across central ministries and state departments creates overlapping approvals, sequential rather than parallel project execution, and chronic time and cost overruns.
How PM Gati Shakti Aims to Address These Challenges
Launched in 2021, the PM Gati Shakti National Master Plan introduces an integrated, multimodal digital approach to transform logistics infrastructure:
- Spatial Digital Integration: Powered by the Bhaskaracharya National Institute for Space Applications and Geo-informatics (BISAG-N) GIS platform, the plan integrates over 1,400 spatial data layers across 16 central ministries, eliminating physical and procedural blind spots during project design.
- Multimodal Synchronization: The framework harmonizes planning across seven growth engines—roads, railways, ports, airports, waterways, mass transport, and logistics infrastructure—aligning flagship initiatives such as Bharatmala, Sagarmala, and Inland Waterways into a unified network.
- Institutional Governance Mechanism: A three-tiered institutional structure—comprising the Empowered Group of Secretaries (EGoS), the Network Planning Group (NPG), and the Technical Support Unit—mandates inter-ministerial evaluation before capital expenditure sanctions are granted.
- Digital Interface Streamlining: By linking with the Unified Logistics Interface Platform (ULIP), PM Gati Shakti reduces paperwork, cuts transaction delays, and enables real-time tracking across diverse transport modes.
Conclusion
Accelerating state-level Gati Shakti Master Plans and deepening ULIP integration are vital steps toward reducing logistics costs to global benchmarks. Addressing these bottlenecks will not only elevate India to the top 25 of the Logistics Performance Index by 2030 but also provide Indian exports a decisive competitive edge globally.