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Indian logistics sector is expected to reach $380 Billion mark by 2025 — Nilesh Ghule, TruckBhejo

Speaking to Nilesh Ghule, the CEO and Co-Founder of TruckBhejo, we get to know how the new ‘PM Gati Shakti’ plan can help the Indian logistics industry grow to a $380 billion market by 2025, and how improved technology can help the sector.

nilesh ghule

The Indian logistics industry is growing, especially after facing a slowdown in the last two years. Adding to the growth are the new policies that are set to give the industry a much-needed push. Better connectivity, dedicated freight corridors, tech-driven warehousing are some key highlights as part of the ‘PM Gati Shakti’ plan announced during the Union Budget 2022 earlier this year. 

To better understand how the policies will help the logistics sector grow and to understand the key factors that will help boost this industry, Express Mobility spoke to Nilesh Ghule, the CEO and Co-Founder of TruckBhejo. 

Excerpts

What is the logistics industry outlook for 2022? How different do you expect it to be compared to 2021?

The Indian Logistics Sector has been growing at a rapid pace and is expected to reach USD 380 Bn mark by 2025. Constant growth in online buying and thus e-commerce business, the government’s focus on localised manufacturing through “Make in India” drive, and the onset of many D2C businesses – all these augurs well for the Indian Logistics Industry in 2022 and beyond. 

I think the adoption of technology by the smaller fleet owners, who own 1-5 vehicles and form the majority of the logistics industry, will go up substantially. It also seems evident, that due to D2C business models expected to rise, the industry will move towards smaller-sized shipments and faster deliveries. 

How will the recent budget announcement help the logistics sector?

The impetus given by the government to build the infrastructure in the recent budget is the biggest positive for the logistics sector. The keen focus on building connectivity through a better road network, dedicated freight corridors, tech-driven warehousing along with Multimodal logistics parks, all these efforts indicate that the age-old perception of “logistics is just about transportation” is changing. 

It is more widely believed that logistics is a specialised function, critical to economic growth and that is probably one of the reasons why a 7 Engine Plan called “PM Gati shakti” has been put in action. All these efforts will help the sector immensely in reducing logistics costs. And this will open up different opportunities for the new age tech-based start-ups like TruckBhejo to take a rightful place in the scheme of things.

What are your views on the National Logistics Policy and what according to you is the key factor that will help the industry grow?

Over the last many years, the Indian logistics industry has been marred by its inefficiencies, and that shows in the higher logistics cost which is ~14% of GDP, much higher than most of the other comparable economies where the average logistics costs are 8%-10% of GDP. 

The National Logistics Policy (NLP) is the right step in the direction of removing those inefficiencies. The introduction of GST has already brought some efficiency to the system, which can be seen in the reduced turnaround time for trucks by 18-20%. Geotagging of warehouses and encouragement of “IoT” in warehousing will be another factor that will remove inefficiencies further. 

Industrial inspection of warehouses by drones is likely to be one more thing that will make processes faster. For all these reasons and many more, it’s imperative that NLP is put into action to spur the growth of the logistics sector.

What are your views on the Gati Shakti scheme and how will this benefit the sector?

Better Infrastructure, improved logistics, and higher economic growth are directly correlated. Gati Shakti scheme is what our current state of logistics Sector warranted for. Both the sector and economy needed a transformative approach, which Gati Shakti Scheme endeavours to provide by having 7 distinctly identified and defined engines namely roads, railways, airports, ports, public transportation, waterways, and logistics infrastructure. 

The logistics sector in India is highly fragmented with most of the marginal players having no access to technology and digitalisation, and hence “Unified Logistics Interface Program” (ULIP) becomes a very important cog in the wheel. For a large part of the logistics industry, ULIP will help in reducing time and costs, in well-organised inventory management along with fewer efforts in the documentation. 

Lastly, 4 Multimodal Logistics Parks, 100 PM Gati Cargo Terminals, and increased speed of goods train by railways, all these will only augment the sector.

What are some improvements that can be made to improve the logistics sector but were missed out in your opinion?

While the budget has hit the right nails on most of the places, it is always like “yeah dil mange more”. Some tax breaks and capital impetus would have been welcomed by the industry. Capital subsidies could also have been given on adoption of technology & digitalisation by smaller logistics players. 

The logistics industry has been demanding to bring fuels under GST to eliminate the price variations across states and reduce the cost of fuel. Nevertheless, the Budget has scored on most of the points for the logistics sector and the sector is well placed and poised for growth.

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