Urgency to develop logistics infrastructure
Global Trade Management (GTM) helps to manage the complexities of global trade such as import and export compliance and clearance, product classification and more.
Infrastructure is critical to the growth of economy and logistics infrastructure in particular with a well-designed extensive network of roads, bridges, railways, ocean and air routes, ports and airports is one of the vital growth drivers for industry and trade. India is one of the fastest growing major economies in the world with an expected GDP growth rate of over 7.5 per cent.
However, its logistics infrastructure is considered highly incapable of supporting the existing and projected high growth rates. Currently India spends around 14.4 per cent of its GDP on logistics and transportation as compared to less than eight per cent by the other developing countries. Realising the importance and urgency to develop India’s logistics infrastructure and enhance its operating efficiency, Government of India has undertaken a number of initiatives towards facilitating trade.
Nitin Gadkari, Minister of Shipping, Road Transport & Highways, Government of India, said “Shipping is just not ferrying of goods and passengers. It is all about the growth of the nation as it promotes trade.” Indian freight transport market is expected to grow at a CAGR of 13.35 per cent and to be worth US$ 307.70 billion by 2020 driven by the growth in manufacturing, retail, FMCG and e-commerce sectors. Of the total freight movement, road constitutes around 63 per cent and expected to increase at a CAGR of 15 per cent, sea constitutes around nine per cent and is mainly used as a major mode for imports and exports and air constitutes around one per cent of and expected to grow around 12.5 per cent CAGR over the next five years. With geopolitical advantages of having a long coastline of over 7,500 km and navigable inland waterways of over 14,000 km, being recognised as the fourth most attractive FDI destination in the world as per UNCTAD, having an absolute single-party majority government at the centre focused on developing this sector through various initiatives like port modernisation and development, inland waterways, hinterland connectivity and multimodal logistics and with National Integrated Logistics Policy (NILP) focused on implementation of infrastructure development programmes for rail and coastal Dedicated Freight Corridors (DFC), national expressways and last-mile roads and rail, logistics market in India should not surprise analysts if they exceed the estimated CAGR of over 12 per cent by 2020.
Indian freight transport market is expected to grow at a CAGR of 13.35 per cent and to be worth US$ 307.70 billion by 2020