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India logistics industry to top US$300 billion

NEW DELHI: May 04, 2016. India’s logistics market is forecast to be worth US$307 billion by 2020 according to Ram Kripal Yadav, the country’s minister of State for Drinking Water & Sanitation.

Speaking at a logistics conference organized by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), Yadav said India spends around 14.4 percent of its GDP on logistics and transportation compared to less than 8.0 percent by other developing countries.

India multimodalHe said India’s cargo and logistics Industry can expect to grow at CAGR of 16 percent in the next few years as new investments create additional opportunities for the logistics sector.

In a bid to reduce costs and promote its ‘Make in India’ campaign, he said the government intends to encourage private investment in the country’s ports via a INR 2.87 trillion program to increase port capacity to 3.2 billion metric tonnes in anticipation of a rise in cargo traffic to 2.5 billion tonnes by the end of 2020.

Yadav noted the country’s plan to build dedicated rail freight corridors (pictured: APM Terminals Pipavav port on India's West Coast) will promote efficient haulage of containerized cargo and reduce times between Mumbai and Delhi to 18 hours from the current 60.

The minister’s comments follow a report by ASSOCHAM that India can save up to US$50 billion if logistics costs are brought down from 14 percent to nine per cent of country’s GDP.

The study suggests logistics service providers should have access to cheap capital to improve infrastructure while the government should create a uniform tax structure and remove multiple checkpoints and documentation requirements to improve the flow of cargo.

“Appropriate policy changes and opening up capacity together with increase in speed for transportation of goods and services through various modes, rail, road, water and others, is imperative for the growth of cargo and [the] logistics industry in India,” commented ASSOCHAM secretary general D.S. Rawat.

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