Gati Shakti is the third pillar of our Amrit Kaal growth strategy

The focus in India is no longer just on the “ease of doing business”, but also on the “cost of doing business”, with sustainability being a common requirement. Recent changes in the world have brought India into global attention not only as a market but also as a preferred destination for global supply chains. The government has rightly focused on infrastructure as the first and primary requirement for India to become part of these value chains. Our continued growing domestic market means this is the perfect time for India to become a sourcing hub for the world. It is also a unique opportunity to be a regional supply chain and logistics hub. This has become a perfect confluence of positive developments.

The country’s two political pillars, domestic manufacturing for Atmanirbhar Bharat and green growth, rest on an important third pillar of freedom of movement. This third pillar therefore involves the creation of an infrastructure that reduces logistics costs while increasing transport efficiency in India.

Reducing logistics costs will make India more competitive internationally. The incumbent government has proactively focused on infrastructure in recent years, and particularly in the last two years with the launch of the PM Gati Shakti initiative.

Creating an infrastructure requires significant investments. In 2021-22 the editions were 6.03 trillion and 2022-23, that’s a revised estimate of spending 7.3 trillion. The government has correctly recognized the need to make the best use of its capital expenditures, which would be helped if project planning and implementation were tracked by several ministries. PM Gati Shakti’s initiative has perhaps made India the first country to have these processes digitized and made visible in all ministries.

As these developments continue, India’s recent budget has focused on 100 key infrastructure projects 75,000 crore total investment. In these projects, multimodal connectivity, digital connectivity and green solutions can be implemented and presented. These have a double promise: Not only will they reduce the cost of doing business, but they will also generate carbon reduction gains across the country. The implementation of digital solutions like FastTag for road transport has led to an estimated reduction in carbon emissions of almost 1 million tons. The potential climate benefits of these 100 projects can be manifold and will help India to achieve its declared climate goals even faster.

The government has announced its largest investment to date, amounting to 10 trillion in budget for 2023-24. I am sure private investment will follow as the ongoing projects will support further reduction of India’s carbon footprint, which is also a key focus for private sector investment.

Infrastructure planning needs a sustained dialogue with users and private actors in order to eliminate bottlenecks. This can be made more efficient by ensuring data integration via the Unified Logistics Interface Platform (ULIP).

The next big focus is on the optimal use of the Indian infrastructure. Benchmarking each of the assets with their best-in-class equivalents coupled with the implementation of digital solutions would result in India significantly reducing its overall investment needs and preparing us for the future.

Demand aggregation or bundling, available capacity information, real-time tracking and analytics will be key aspects of end-to-end logistics management. Cloud-based IT systems, the integration and coordination between Indian logistics service providers and the involvement of small service providers will be further efficiency drivers that will increasingly be used. Task outsourcing to (and maturing of) third and fourth-party providers in India should make PM Gati Shakti even more relevant and climate-friendly.

In addition, the government has rightly recognized that the Indian states must adhere to the center’s infrastructure plan and also to its logistics policy. Therefore, this budget provides for concessional financing for states – loans on favorable terms, which must be invested in 2-23-24 itself – to implement important projects and achieve their goals. This support aims to ensure that development is spread across different regions of India. The spending is expected to create a virtuous cycle to support domestic demand while further positioning India as a global manufacturing hub.

Initiatives such as PM Gati Shakti and the National Logistics Policy are laying the groundwork for India to seize its opportunity to become an integral part of global supply chains. Logistical efficiencies will lower the cost of doing business and make India an even more attractive destination.

The pillars of manufacturing and green growth will yield benefits as the third pillar of an efficient logistics infrastructure as catalyzed by PM Gati Shakti continues to emerge. Therefore, this focus is a key element of a robust strategy to achieve rapid economic growth as envisaged by Prime Minister Narendra Modi. In the coming period, the rapid growth enabled by policy initiatives is expected to help pay Amrit Kaal dividends to over 1.4 billion Indians. Source: LiveMint

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