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New Delhi: Logistics sector in India is undergoing rapid transformations to meet the demands of the growing number of consumers. It is also one of the most-looked upon industries that will drive India’s macro economic growth. The industry as a whole is looking up to Finance Minister Nirmala Sitharaman’s budget announcement tomorrow, 1 February 2023.
Mr. Amit Maheshwari, Founder, and MD of Softlink Global has shared with India.com his perspectives and expectations from Union Budget 2023-24. Here are excerpts from the discussion.
What are the trends that will reshape the logistics and supply chain in 2023?
Logistics and supply chain is moving towards a technological shift and this trend will continue at a faster pace in 2023. The use of more autonomous vehicles is another trend we can notice, especially in port areas in India. Real-time Tracking and analytics will be one trend we will see in 2023 that will insulate end-to-end logistics management in the coming days.
Artificial Intelligence and Machine Learning will also dominate this industry – which will streamline and make logistics more agile, and nimble in the coming days. With this, demand for all-inclusive logistics management SAAS will soar higher and logistics companies are expected to make prudent investments in bolstering their management platforms accordingly. This will reduce overhead costs and make India’s homegrown businesses and exporters more competitive with the global players.
We will see more cloud-based systems & integrations among Indian logistics suppliers. More SMEs will move towards this, pushing the industry altogether to cloud-based systems & integration.
On the importance of having a sustainable supply chain management
A 2021 Niti Aayog report highlights that by 2050, the cumulative energy consumption from freight transport will be around 5.8 billion tonnes and can be reduced by 50% under an efficient scenario. The carbon footprint of the logistics sector can be addressed with the adoption of electric vehicles and the adoption of an integrated technology framework for lesser energy consumption. But the question of sustainability in logistics is not restricted to social sustainability or environmental sustainability only.
Long-time financial sustainability is required in this sector. And this is possible only when there will a cost parity for the long term. National logistics Policy is a framework in that direction for the sector. With the use of technology Logistics companies will be able to arrive at a steady cost-to-company which will create financial sustainability in the industry.
Logistics is a barometer of a country’s economic growth, but it’s completely dependent on the performance of other industries. How did the government support the industry hit by supply chain disruptions during the COVID period?
The global average logistics cost to a country is approximately 8-9%, whereas, in India, the logistics sector makes up 14.4% of the country’s GDP, and costs 13-14% of the GDP. So, the cost of logistics in India is much higher compared to other countries. And there is a gap of $180B per annum, that needs to be addressed to achieve the country’s dream of a $5T economy. The largely informal or unorganised sector has contributed to the country’s growth, but its structural fragmentation has been neglected for far too long. In recent years, there has been a paradigm shift in the logistics sector with the move towards making it an organised sector. The policy changes and implementation that happened in the last few years in form of GatiShaktiProgramme, National Logistics Policy2022 – will surely help the sector.
How effective is the Unified Logistics Interface Platform from an industrial perspective?
Unified Logistics Interface Platform (ULIP), integration of technology through Digital Systems (IDS), Ease of Logistics (e-LOG), System Improvement Group (SIG), etc. – these initiatives are expected to give more control to the manufacturing industry, especially to the MSMEs, over the supply chain, thus resulting in a significant rise in exports.
ULIP will help bring together different systems, private and government players etc. ULIP can track momentary movements in a logistics chain of events. This will give better visibility and access to solve any leakage in the chain and address it in real time. And going forward ULIP will connect sea, road, and air all together – giving it a seamless transition in the product supply chain. This will shorten the time, and make our system more agile and competitive globally.
Expectations of the logistics industry from Budget 2023
“The Logistics sector is regarded as the backbone of the Indian economy and contributes significantly to the GDP. Hence, the budget must encourage more investments in this sector. It is important to focus on the execution of specific strategies that will help to implement the National Logistics Policy (NLP) with an aim to make India competitive globally while being ‘atmanirbhar’ in this sector.
SMEs must be encouraged to adopt technology such as SaaS solutions, which will help reduce the cost of logistics. A welcome move would be for this Budget to create a fund to provide subsidies to the SMEs for any technological upgradation which will push the technology.
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