Logistics sector is the one that will reap most of the benefits of the government’s efforts to focus on investment in infrastructure. The existing state of infrastructure creates a great challenge, but the logistics industry sees a ray of hope as the government is planning to get rid of infrastructure bottlenecks and lift the manufacturing sector through Make in India initiative.
Logistics Industry will play a significant role in the success of such initiatives. E-commerce is also increasing the growth of the industry, as these e-commerce companies need to deliver products in the remotest corner of the country.
Although the condition of infrastructure in India is a challenge, so much so that the growth is discouraged. The Government is now trying to address these issues in an efficient way.
One of the biggest problems is that different parts of the logistics industry come under different departments. This leads to a disorganized and inefficient structure. New technologies are being adopted by the industry but its impact is not evident due to the weakness of the fundamental infrastructure. There are many other major problems that directly or indirectly affect the growth of the industry. And an overarching body can help a lot in this case.
GST implementation and the logistics sector
Undoubtedly, the execution of the Goods and Services Tax would improve productivity and efficiency levels not only in the logistics industry but the whole economy. Transit times can be cut down by 30-40 percent and logistics cost can be brought down by 20-30 percent. And the manufacturing sector may receive a hike of about 3-4 percent which is an important value-add to the country’s economy.
The RBI Governor, Raghuram Rajan said, “the GST would unify the nation”.
Some development drivers and inhibitors for the logistics industry
The growth driving and preventing factor for the industry majorly depends on the quantum of investment by capitalists, government protocols, and the investment in the fundamental infrastructure by the country’s government. The sector’s performance has been good in the last few years; it is growing at a rate of 15% per year. Factors like adjournment in the execution of GST can be one of the major reasons to hinder the industry’s growth.
E-commerce for the logistics sector
The e-commerce sector of India is evaluated to be worth $ 220 billion by the end of 2025. So the need for efficient logistics companies for good to be delivered to multiple locations will increase at an electric pace. The growth of the e-commerce sector will also ensure the growth of the Indian logistics sector.