India’s Logistics After 75 years of Independence

According to the latest available metrics, as many as 4.6 billion metric tonnes of goods are handled in India every year. Considering the scale and magnitude of these freight operations, let us look at the state of India’s ports, roadways, railways, and airways as the South Asian giant is ready to commemorate its 75^th year of independence.

Following 75 years of independence, India has emerged as the 47^th most logistics efficient economy in the world, according to the 2018 Logistics Performance Index (LPI).  

Created by the World Bank, LPI is an interactive benchmarking tool aimed at helping countries zero in on the opportunities and challenges they confront in trade logistics with the goal of helping these countries better their performance. 

Juxtaposing 160 countries, the LPI is inferred from a global survey of ground operators including freight forwarders and express carriers. Combining their in-depth knowledge and qualitative assessments, the survey respondents offered feedback on the most logistics-friendly countries where they operated, which the World Bank further supplemented with quantitative data on key performance components.

Thus, the LPI is a qualitative and quantitative assessment of a given country’s logistics friendliness gauged upon the following six dimensions:

• Efficiency of customs and border management clearance (Customs) 
• Quality of trade and transport infrastructure (Infrastructure) 
• Ease of arranging competitively priced shipments (Ease of arranging shipments) 
• Competence and quality of logistics services – forwarding, trucking & customs brokerage (Quality of logistics services) 
• Ability to track and trace consignments (Tracking & Tracing) 
• Frequency with which shipments reach consignees within scheduled or expected delivery times (Timeliness)

According to a 2021 Niti Aayog report, the logistics sector represents 5 per cent of India’s GDP, employing around 22 million people, including handling 4.6 billion metric tonnes of goods a year.  

Going beyond these appraisals of India’s logistics competencies, let us glean some more insights on the state of the South Asian behemoth’s ports, railways, airways and roadways, the lifeblood of trade and commerce.

Ports

India’s Department of Ports has its origins in the Department of War Transport, which was originally formed before independence in July 1942.  

Currently, ports, shipping, and waterways sectors, which also encompass shipbuilding and ship repair, major ports, national waterways, and inland water transport, fall under the purview of the Ministry of Ports, Shipping and Waterways.   

The ports wing of the ministry is accountable for the development of 11 major port trusts, aimed at providing the necessary and sufficient cargo handling capacity for India’s export and import trade. Ports in India are responsible for 90 per cent of EXIM cargo in terms of volume and 70 per cent by value. India is also serviced by 200 non-major ports (minor ports).

Major ports fall under the administrative control of the Ministry of Shipping while the minor ports are under the authority of respective state governments through their maritime boards.  

All the major ports are functional while only 65 of the minor ports handle cargo, leaving the balance 135 of them as ‘Port Limits’ where no cargo is handled but used by fishing vessels and small ferries.  

Major ports trusts include Chennai Port Trust, Cochin Port Trust, Deendayal Port Trust, Jawaharlal Nehru Port Trust, Paradip Port Trust, Kolkata Port Trust, Mormugao Port Trust, Mumbai Port Trust, New Mangalore Port Trust, Visakhapatnam Port Trust, and V. O. Chidambarnar Port Trust.  

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Railways

What started as a small idea for a British chief engineer, George Clark, at Bhandup locality of modern-day Mumbai in the erstwhile Bombay Government under the British has now transformed into the colossus of Indian Railways, the lifeline of the country’s 1.3 billion population.  

During his visit to Bhandup in 1843, Clark thought of a railway link between Bombay, Thane, Kalyan and Thal and Bhore Ghats inclines. The idea later fructified into India’s first train with 14 carriages and 400 guests, which departed at 3:30 pm on April 16, 1853 from Bori Bunder to Thane. 

Later, the first passenger train rolled out of Howrah for Hooghly on August 15, 1854 for 24 miles, marking the establishment of railways in the Eastern part of the Indian subcontinent. A similar development occurred in the northern and southern parts of India by 1859. By 1880, Indian Railways had a route mileage of about 14,400 km, which went on to become a multi-gauge and multi-traction system, encompassing an 86,526 km long network of broad gauge, 18,529 km meter gauge and 3,651 km narrow gauge, amounting to 1,08,706 km in total by 2021. 

Out of around 11,000 daily trains powered by 7,566 locomotives, 7,000 are passenger trains with 37,840 coaching vehicles. Besides passenger services, Indian Railways is a big freight player, plying 220,000 wagons which make use of 2,300 goods sheds, among others.  

The public sector behemoth has implemented a Freight Operations Information System (FIOS) to computerize freight operations and has also incorporated a Rake Management System (RMS). In 2021 – 22, Indian Railways logged the highest ever incremental freight loading at 1,279 million metric tonnes, recording a growth of 176.2 million metric tonnes from the previous fiscal year.

Airways

India’s commercial aviation started off with a single engine De Havilland Puss Moth Tata Airlines plane carrying mail from Karachi (now in Pakistan) to Madras (Chennai) in 1932, piloted by J. R. D. Tata, former Tata Group Chief, and India’s first pilot’s license holder.  

In time, Tata Airlines morphed into Air India, which was later nationalized and again returned to the Tatas fold after several decades in January 2022.  

With these humble beginnings, the Indian aviation industry has now become a giant, valued at a market size of $16 billion to emerge as the third largest aviation market in the world with projections to overtake the United Kingdom to become the third largest aviation market overall in a couple of years. Currently, India is the 10^th largest civil aviation market in the world.  

According to the International Air Transport Association (IATA), India is expected to become the third largest air passenger market by 2030.  

At the end of 2021 – 22, India’s air passenger traffic stood at 188.89 million while air traffic movements were 17.5 lakh. Data from the Department for Promotion of Industry and Internal Trade (DPIIT) indicated that FDI inflows into the air transport sector, which also includes air freight, touched $3.54 billion during April, 2000 to March, 2022. By 2024, India aims to inaugurate 100 more airports.  

Currently, there are around 712 aircraft and 129 airports in the country. Compared to the quantum of freight conveyed through the ports, railways and roadways, air freight is minuscule, estimated at 3.14 million MT for FY22.  

Roadways

According to India Brand Equity Foundation (IBEF), a Trust set up by the Department of Commerce, Ministry of Commerce and Industry to disseminate knowledge on Indian products and services, India houses the second largest road network in the world, running into 5.89 million km.  

As a country with a low coast to landmass ratio, bulk of India’s freight is ferried through the roads, which also holds good for passenger traffic. 

India’s road network transports 64.5 percent of all goods and 90 percent of the total passenger traffic. Niti Aayog noted that 50 percent of India’s freight transport occurs along the Golden Quadrilateral Road network and the two diagonal highway networks linking Delhi, Mumbai, Chennai, and Kolkata.  

Considering the strategic role of roadways, highway construction in India rose at 17 percent CAGR between FY16 and FY21. Even during the Covid lockdown in FY21, India built 13,298 km long highways. In October 2020, the Central government laid the foundation for nine national highway projects extending up to 262 km, valued at Rs 27 million in Tripura, northeast India.  

Further, the 2022 – 23 Union Budget earmarked Rs 220,000 crore to the Ministry of Road Transport and Highways. Under the National Infrastructure Pipeline for fiscals stretching from 2019 – 25, India has dedicated Rs 111 billion, while this sector is expected to receive 18 per cent of capital expenditure during this timeline.