We welcome the National logistic policy (NLP) unveiled by the Prime Minister Narendra Modi that includes four major steps in order to bring Indian logistics on par with the global benchmark. These four steps include Integration of Digital Systems, starting a Unified Logistics Interface Platform (ULIP), improving Ease of Logistics (ELOG), and setting up a System Improvement Group (SIG).
We believe the policy that aims to promote seamless movement of goods, enhance the competitiveness of the industry and significantly reduce transportation; warehousing and Inventory costs from overall 14% of GDP to a single digit can do wonders to the supply and cold chain logistics sector in India. In current times, for transporting and storing temperature-sensitive products in refrigerated storage has become an integral part of the supply chain. There are various bottlenecks that need to be addressed in unison by the industry stakeholders.
Currently, higher logistics cost is leading to an industry estimated competitiveness gap of $180 billion for India, and experts say this gap is likely to go up to $500 billion by 2030. According to the most recent World Bank Logistics Index of 2018, India is ranked 44th in logistics costs, lagging peer group countries like China, which is at the 26th position.
For a nation that serves as the worldwide pharmaceutical hub, revolutionizing its manufacturing ecosystem under make in India initiative, aims to be a fully developed economy in the next 25 years and hence, enjoys massive investor interest, having a solid national policy that acts as a critical support system to the supply chain and logistic infrastructure, is a great step forward.
Covid19 pandemic induced global supply chain crisis has called for quick implementation of reforms. Thankfully in India, the government is laying down the strong foundation for the long-term growth of Indian industry and trade. Changing consumer preferences, high population growth, and increasing global demands for Indian products and commodities will drive the expansion in the cold storage capacity, development, and automation in the sector.
India is the largest global producer of several agricultural commodities. It generates more than 400 million MT of perishables every year. It is also the world’s largest producer and consumer of dairy products, with more than one-fifth share in global milk production. As per industry estimates around 30% of this produce gets spoiled due to lack of proper warehouses and cold storage facilities.
35 multi-modal logistics hubs are being established in India. About 3500 service providers in the country provide transportation and distribution services for the agricultural sector. However, there are only 8100 cold storage facilities, with a combined capacity of about 30 million MT, which can fulfil only one-fifth of the national requirement. India is short by 100 million MT of cold storage capacity and over 1, 00,000 refrigerated trucks and there is an urgent need to fill this huge capacity gap to bring India at par with its global peers. Our global counterparts like US and China have many times bigger capacities of cold supply chain infra including a fleet of five and two lakh plus reefer vehicles.
As per industry reports, the private sector operates about 90% of these cold storage facilities at an average capacity utilisation of 60- 75%. Still, approximately 25-30 % of fruits and vegetables get wasted due to the poor supply chain infrastructure and lack of collaboration within the industry. Hopefully the NPL will address the issue and bring all the essential elements and stakeholders together to propel the faster growth.
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