LOGISTICS SECTOR

• The Indian logistics sector is currently valued at $160 Bn, the sector is expected to become worth $215 Bn in the next two years.
• India’s rank has gone up from 54 in 2014 to 44 in 2018 in the World Bank’s Logistics Performance Index (LPI), in terms of overall logistics performance.
• The Indian logistics sector employs more than 22mn people
• The Logistics Sector was granted infrastructure status in 2017.

The infrastructure status permits the Logistics Sector to avail the following benefits:

1. Infrastructure lending at easier terms with enhanced limits.
2. Access to larger amounts of funds as External Commercial Borrowings (ECB).
3. Access to longer tenor funds from insurance companies and pension funds.
4. Eligibility to borrow from India Infrastructure Financing Company Limited (IIFCL).

INITIATIVES TAKEN BY THE GOVERNMENT FOR IMPROVING BUSINESS ENVIRONMENT

1. A new Logistics Division has been set up in the Department of Commerce to coordinate integrated development of the sector by way of policy changes, improvement in existing procedures, identification of bottlenecks and gaps, and introduction of technology-based interventions.
2. Expenditure on investment in logistics, including infrastructure, will touch $500 Bn, annually, by 2025.¹
3. Multi-Modal Logistics Parks Policy (MMLPs): The MMLPs are a key policy initiative of the Government of India to improve the country’s logistics sector. This initiative will lower freight costs, reduce vehicular pollution and congestion and cut warehouse costs to promote domestic and global trade.²
4. Logistics Portal: A National Logistics Portal is being developed in phases to serve as a transactional e-marketplace by connecting buyers, logistics service providers and relevant government agencies. This portal will be the single window marketplace to link all stakeholders.³
5. Logistics Data Bank: As a part of the India-Japan bilateral cooperation, a Logistics Data Bank Project has been commissioned to track containers on a ‘near-real-time’ basis. RFID tags are placed on every container coming out of the ports to tracks the container’s movement. The project has already expanded to various ports in India and covers almost 90% of the total container volumes in India.

CHAMPION SERVICE SECTORS

Champion Services Sectors refers to the 12 identified sectors where the Government wants to give focused attention for promoting their development and realizing their potential. These include Information Technology & Information Technology enabled Services (IT& ITeS), Tourism and Hospitality Services, Medical Value Travel, Transport and Logistics Services, Accounting and Finance Services, Audio Visual Services, Legal Services, Communication Services, Construction and Related Engineering Services, Environmental Services, Financial Services and Education Services.

A dedicated fund of Rs. 5000 crores have been proposed to be established to support initiatives for sectoral Action Plans of the Champion Sectors.

The respective line Ministries/Departments finalizes the Action Plans and the implementation timelines along with a monitoring mechanism to monitor implementation under the overall guidance of the Committee of Secretaries (CoS) under Cabinet Secretary.

The idea was launched and accepted on 28 February 2018.

RATIONALE AND OBJECTIVE

This initiative is expected to enhance the competitiveness of India’s service sectors thereby creating more jobs in India, contributing to a higher GDP and export of services to global markets.

TARGETS

The share of India’s services sector in global services exports was 3.3% in 2015. Based on this initiative, a goal of 4.2% has been envisaged for 2022.

The share of services in Gross Value Added (GVA) was about 53% for India in 2015-16 (61% including construction services).

This initiative is expected to raise the share of services in GVA to 60% (67% including construction services) by the year 2022.

Origin

The Group of Secretaries in their recommendations to the Prime Minister, had identified ten Champion Sectors, including seven (7) manufacturing related sectors and three (3) services sectors, for promoting their development and achieving their potential.

It was subsequently decided that Department of Industrial Policy and Promotion (DIPP), the nodal department for ‘Make in India‘, would spearhead the initiative for the Champion Sectors in manufacturing and Department of Commerce would coordinate the proposed initiative for the Champion Sectors in Services.

Accordingly, Department of Commerce, with wide stakeholder consultation coordinated the preparation of draft initial sectoral reform plans for several services sectors and, subsequently the action plan.