Gati Shakti: Changing the Face of Indian Logistics

The Union Budget 2023 increased the budget for the PM Gati Shakti National Master Plan from 5,000 crore to 10,000 crore and allocated 2.4 lakh crore to Indian Railways. This plan aims to boost India’s logistics competitiveness by increasing railways’ freight movement share from 27% to 45% and addressing infrastructure challenges. However, several challenges, including operational and connectivity issues, infrastructural issues, and a lack of integration, must be addressed in order to meet these targets.

Efficient logistics is the backbone of a successful economy, enabling businesses to access markets, reduce costs, and increase productivity, ultimately leading to sustainable economic growth.” – Nitin Gadkari, Minister of Road Transport and Highways.

What is the National Master Plan of Prime Minister Gati Shakti?

  • Comprehensive development: The Government of India announced a comprehensive infrastructure development plan in November 2021.
  • Aim: By focusing on infrastructure such as roads, railways, airports, ports, mass transportation, waterways, and logistics, the plan aims to improve economic growth and sustainable development.
  • Budget Increase: The budget for the PM Gati Shakti National Master Plan has been increased in the Union Budget 2023.
  • The plan calls for the construction of five major corridors:
  • The East-West Corridor will link India’s east and west coasts, stretching from Silchar in Assam to Porbandar in Gujarat.
  • North-South Corridor: This project will link India’s northern and southern regions, stretching from Srinagar in Jammu and Kashmir to Kanyakumari in Tamil Nadu.
  • The North-East Corridor will connect India’s northeastern states, stretching from Imphal in Manipur to Kohima in Nagaland.
  • The South-West Corridor will connect India’s southwestern states, stretching from Ratnagiri in Maharashtra to Kanyakumari in Tamil Nadu.
  • The East Coast Corridor will connect India’s east coast states to the rest of the country, stretching from Kolkata in West Bengal to Kanyakumari in Tamil Nadu.
  • The railways, which have a pan-India network and provide an efficient and cost-effective mode of logistics movement, are an essential component of the plan.

Currently, the Freight Movement

  • Impact of freight movement: Currently, road transport accounts for 65% of freight movement, resulting in congestion, pollution, and increased logistics costs.
  • Cost is prioritized over convenience: Although rail transportation is less expensive than road transportation, convenience has trumped cost, and railways have lost their share of freight movement to more flexible modes.
  • As an example: Coal accounted for 44% of total freight movement of 1.2 billion tonnes in 2020-21, followed by iron ore (13%), cement (10%), food grains (5%), fertilisers (4%), iron and steel (4%), and so on.
  • Non-bulk commodities: Non-bulk commodities account for a very small portion of rail freight movement.
  • Increased Container Traffic: The ease of transporting non-bulk commodities in containers has resulted in an increase in containerized traffic. Railway systems around the world are heavily investing in advanced rail infrastructure to facilitate quick and low-cost container movement.

Challenges in Infrastructure, Operations, and Connectivity

  • Several challenges confront the national transporter, resulting in a shift of freight traffic to roads.
  • Customers face infrastructure challenges such as increased rail transit time, pre-movement and post-movement procedural delays, a lack of necessary terminal infrastructure, good shed and warehouse maintenance, and an uncertain supply of waggons.
  • Connectivity: The lack of integrated first and last-mile rail connectivity increases the risk of damage due to multiple handling and also raises the cost of inventory holding.

Strategies for Improving Rail Cargo Movement Efficiency in India

  • To efficiently utilise resources, the Indian Railways must improve infrastructure and encourage private participation in the operation and management of terminals, containers, and warehouses.
  • Establishing a special entity within the railways to handle intermodal logistics in collaboration with the private sector could address the railways’ first and last-mile issues.
  • As an example: An integrated logistics infrastructure with first and last-mile connectivity is required to make rail transportation competitive with road transportation and to facilitate rail exports to neighbouring countries such as Nepal and Bangladesh.
  • A model similar to Uber: An Uber-style model for one of the two cargo waggons, in which the customer books the waggon through an online application, could help increase the utilisation rate of these waggons.

Way Forward

  • The use of railways for cargo transportation is critical to improving India’s logistics competitiveness.
  • With PM Gati Shakti, the Indian Railways are upgrading their infrastructure, but continuous monitoring of existing projects and identification of new priority areas are required to meet rail freight movement targets.

@the end

The Prime Minister Gati Shakti National Master Plan has the potential to transform India’s logistics infrastructure and increase railway freight movement. However, several challenges such as operational and connectivity issues, infrastructural challenges, and lack of integration need to be addressed. These challenges may be addressed by the upcoming Dedicated Freight Corridors, multimodal logistics parks, and the establishment of a special entity under the railways.

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