The Asian Development Bank has approved a policy-based loan of $350 million to help India develop and modernize its logistics sector.
The loan will finance the second subprogram of the Strengthening Multimodal and Integrated Logistics Ecosystem Program, supporting India’s efforts to establish a comprehensive policy, planning, and institutional framework at the central, state, and city levels, the bank said in a statement on Friday.
The development of the logistics sector is very crucial for improving the competitiveness of the manufacturing sector in India.
According to ADB, continuous reforms through strategic policy reform, improvement in supporting infrastructure, and digital integration are bound to revolutionize the logistics landscape.
This transformation can lead to greater efficiency, cost reduction, creation of job opportunities, and gender inclusiveness, which are all factors that potentially underpin sustained economic growth.
The Government of India has initiated several strategic policies in this regard to overcome the constraints that impede the logistics sector, including the PMGS-NMP and the NLP.
The initiatives here include those of infrastructure, streamlining of processes, and promotion of digitization.
ADB’s program supported India’s reform efforts that have improved India’s ranking in the World Bank’s Logistics Performance Index and reduced logistics costs significantly, the bank said.
The main measures are to establish institutional arrangements for logistics planning at both state and city levels, put into place a plan that has to do with determining grain storage and adopt green transition guidelines about inland waterways.
“The development of the logistics sector has a profound impact on the competitiveness of the manufacturing sector. Improved logistics efficiency enhances supply chain resilience, reduces transaction costs, and increases export competitiveness,” said ADB Senior Public Management Economist Sameer Khatiwada.
Standardized processes, coupled with the integration of digital technologies, make for smoother movement of goods, which is important for manufacturing growth,” added Khatiwada.
While India’s goods export rose from $48.5 billion to $467.5 billion during the period 2000-2022, industrial exports also grew from $39.6 billion to $317.4 billion.
The government aspires to achieve $2 trillion exports of goods and services by 2030. The program helps India inch closer to achieving this target by improving productivity and transfer of goods, reducing logistics cost, while contributing to the reduction of greenhouse gas emissions. These reforms in the logistics sector are bound to create a lot of jobs, both in urban and rural areas. This will be further helped by the rise in demand for skilled logistics workers due to private sector investment and efficiency in processes. Digitisation and automation of logistics processes would also create new kinds of jobs, in line with the changing needs of the sector, according to ADB.
