Opinion: Why is Logistic Cost 12% in America, 8% in China and 16% in India, when will it be in single digit? – logistic cost is very high in india, where it will be in single digit

By December next year there will be a significant reduction!

Nitin Gadkari mentioned the logistic cost again in a program of industry organization Assocham yesterday. He said that there is a need to bring down the logistics cost. He also informed that the government has set a target to bring it down to single digit i.e. nine per cent by the end of 2024. But when will this happen? This is the biggest question. If we talk about the production of an item, then the cost of raw material is the highest in it. Then labor cost. There is also a cost which is not visible to everyone. That is the logistic cost. The sooner it is reduced, the better it will be for the economy. This will not only reduce the prices of goods, people’s time will also be saved. But the biggest question is when will this happen?

How is logistics cost important?

How important is the logistics cost in the production of a product, it can be better understood with an example. Let us assume that Tata trucks are made in Jamshedpur, Jharkhand. This truck is not only sold across the country, it is also exported to foreign countries. Steel is made for this truck. Raw material for steel is brought from Indian mines. Coke is also used in this which comes from abroad. The finished goods are then sent by road freight to different parts of the country. The cost incurred in the transportation of these goods is the logistic cost. Gadkari himself told that at present the logistics cost in India is 16 per cent. While it is 12 percent in America and only eight percent in China.

How will it happen?

Experts say that the infrastructure of a country plays an important role in reducing or increasing the logistics cost of a country. This can happen if the roads are better, the cost of fuel is less. The high cost of logistics is a major challenge before industry and business in any country. If we take the example of India, it is now 16 percent here. While it is eight percent, it is 12 percent in America and European Union countries. Gadkari says that if we can bring down the logistics cost to nine percent, our exports will increase by 1.5 times.

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This is the focus of the government

At present, the central government is focusing on improving both road and rail routes. The government wants to reduce the distance between major cities and industrial and business centers of the country. Therefore, on the one hand, an exercise is underway to speed up the transportation of goods by rail through the Dedicated Freight Corridor. On the other hand greenfield highway projects are going on in almost every part of the country. Along with this, some industrial corridors based on highways are also being built. At present, an expressway is being built between Delhi and Mumbai, so that people will be able to reach there in just 12 hours.

National Logistics Policy has been made

Prime Minister Narendra Modi has recently launched the National Logistics Policy (NLP). The Prime Minister has said that the logistic policy has brought new energy to every sector. Policy is a beginning, progress is determined by policy and performance. The need for a National Logistics Policy was felt in India, as the logistics cost in India is very high as compared to other developed economies. The Prime Minister believes that reducing logistics costs is essential for improving the competitiveness of Indian goods in both domestic and export markets.

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need to be on time

In order to reduce the logistics cost, it is necessary that infrastructure projects are completed on time. For example, take the Dedicated Freight Project, which is yet to be completed. The foundation stone of this project was laid by the then Prime Minister Atal Bihari Vajpayee. Similarly, the project to connect Kashmir with the railway line dates back to the 1970s. This project has also been given the status of a national project so that there is no shortage of funds. But till now Kashmir valley has not been connected to Delhi through railway line. Similarly, many greenfield road projects in Bihar are stuck due to non-acquisition of land. That’s why there is a need for the state and the central government to work together in this task.