100-day agenda: Commerce ministry pushes for separate logistics department

Official estimates put the size of the Indian logistics market at $100-125 billion and growing at about 5% annually

In a bid to bring all regulatory powers over the logistics sector under its wing, the commerce and industry ministry has pushed for the creation of a separate department for logistics.

Submitted to the Cabinet, the proposal is part of the ministry’s 100-day agenda, and has the support of the Prime Minister’s Office (PMO), sources said. However, the move may find opposition from other ministries such as road transport and shipping, if they feel their marquee schemes are being handed over to another ministry.

Case in point, the series of logistics parks envisaged under the broader Bharatmala scheme of the road transport ministry may now be implemented by Udyog Bhavan, which has championed the plan to reduce high logistics costs (estimated 14 per cent of gross domestic product) to less than 10 per cent by 2022, and is also finalising a dedicated policy for the sector.

Official estimates put the size of the Indian logistics market at $100-125 billion and growing at about 5 per cent annually. According to the government, logistics services and infrastructure remain highly concentrated in just 15 states and Union Territories, which account for 90 per cent of the total exports by value.

To spread services, the National Highways Authority of India (NHAI) has prepared the detailed project reports (DPRs) for these warehousing and storage hubs, to give fillip to the logistics industry, in Guwahati (Assam), Surat (Gujarat), Dabaspet (Karnataka), Indore (Madhya Pradesh), and Mumbai.

According to a senior official, “The NHAI is ready with the DPRs, but the states have to come on board in terms of providing land for these projects. Once that is done, the execution agency for these hubs will be decided.” However, it is learnt that the commerce and industry ministry is also in discussion with other government agencies for the implementation of these projects.

Last year, the PMO had picked up on the idea to create a single entity for streamlining the logistics sector, reduce wait time at ports and cut costs. Subsequently, a separate division under the commerce department was created in July 2017 under a special secretary-ranked officer.

The division is currently putting finishing touches to a logistics portal set to boost logistics infrastructure, optimise processes, and aid in monitoring and tracing. The data tool will combine data from a wide range of sectors, mapping industrial clusters and infrastructure like highways, railway lines, and waterways. It will also collect trade data from major ports and compute the logistics flow of major commodities such as coal, steel, and cement.