Aiming to secure stronger logistics linkages with neighbouring nations and reduce costs, the government will be holding the first-ever major buyer-seller meet in the logistics sector.
The inaugural run of Logix India 2019, set to be held between January 31 and February 2, 2019, is being undertaken by the commerce department and the Federation of Indian Export Organisations (FIEO) as a major initiative to improve the cost-effectiveness and operational efficiency of the sector.
“The cost of logistics in India is a high 14 per cent, whereas in developed economies, it’s nearer 8 per cent. We need to reach that figure,” Ajay Sahai, director-general and chief executive officer, FIEO, said.
India ranked 44 in the World Bank’s Logistics Performance Index 2018. According to the Economic Survey 2017-18, India’s logistics industry is worth around $160 billion and is likely to touch $215 billion in the next two years. The sector provides employment to more than 22 million people and has grown at a compound annual growth rate of 7.8 per cent during the last five years, with future growth estimates pegged at 10.5 per cent over the next five years.
“The industry is facing challenges such as high cost of logistics affecting competitiveness in the global market, underdeveloped material handling infrastructure, fragmented warehousing, and lack of seamless movement of goods across modes, among others,” N Sivasailam, special secretary (logistics), Department of Commerce, said.
“Over 20 countries are sending their delegation to explore logistics partnerships with India. The FIEO is focusing on logistical solutions for difficult-to-reach markets and over 100 international delegates from 20 countries, including Iran, Iraq, Afghanistan and others, are expected to attend the event,” Ganesh Kumar Gupta, president, FIEO, said.
Further development of global logistics will give a boost to external demand, thereby encouraging manufacturing and job creation. This will, in turn, be instrumental in improving the country’s gross domestic product,” Gupta added.
The FIEO will also focus on investment opportunities in infrastructure development, warehouse consolidation, technology integration and information technology enablement, skilling of manpower, etc at the three-day meet. The need for integrated logistics sector development has been felt for quite some time in view of the fact that the logistics cost in India is very high, compared to developed countries. High logistics cost reduces the competitiveness of Indian goods, both in the domestic as well as the export market.
The sector is expected to grow to $360 billion by 2032, from the current $115 billion. Increasing globalisation of the economy, along with renewed manufacturing vigour attributed to Make In India campaign and growth of e-commerce business, all forecasts rapid growth in the Indian logistics sector.