BackFrom Mumbai, it’s easier to send stuff to UK than Delhi: Nitin Gadkari
Logistics costs are the biggest problem in India, says road transport minister Nitin Gadkari
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New Delhi: The National Democratic Alliance (NDA) government wants to promote the usage of trucks with greater goods carrying capacity and also increase the distance they cover in a day by 100km to address India’s transportation, environment and energy security needs, said Nitin Gadkari, minister for road transport and highways, shipping and ports.
The Indian logistics sector is expected to grow to $360 billion by 2032 from $115 billion now. In an interview, Gadkari said the government is organizing the first India Integrated Transport and Logistic Summit (IITLS) in New Delhi in May. The three-day event will bring together over 50 global chief executives from across different modes of transport, administrative geographies and integrate capital investment with regulatory and policy development.
Edited excerpts from the interview:
What is ailing India’s transportation sector?
In India, logistics cost is the biggest problem. It’s unfortunate that if you wish to send any stuff from Delhi to Mumbai, it’s expensive as well as complicated. But in case you wish to send the same stuff from Mumbai to London or Dubai, it’s easy and cheap. The reason behind this is that it was never examined before.
Take cotton, which is grown in Maharashtra, threads are made in Kolhapur and then sent to Ludhiana for manufacturing textiles and then gets exported from the JNPT (Jawaharlal Nehru Port) in Mumbai. Due to this uneven distribution our logistics cost goes up to 16-18%, while in China it’s 8-10% and in European nations it’s 10-12%. This has led to Indian goods becoming uncompetitive globally. If we manage to bring down this logistics cost to less than 6%, it will give a huge boost to our exports and increase it by one and a half times.
Under national highways, we are doing two things. A truck hardly travels 225-250km in India as compared to 550-600km in the US. Also, it burns more fuel here, pollutes more and has a high average cost of running, leading to high transportation costs.
We are constructing cement concrete roads and expressways. We want to increase truck speeds to 350km per day, which will help in higher vehicle utilization. To do this, we have decided to increase the national highways length from 96,000km to 200,000km. Of the 5.2 million km road length in the country, only around 2% is national highways, with 40% of the country’s traffic plying on it... This 200,000 km will lead to 80% of the country’s traffic moving on national highways.
Of the Rs15-18 trillion investment expected in India’s road sector by 2019, Rs4.5 trillion has already been made and we expect to close this year at Rs5-5.5 trillion till March end.
We are also promoting inland waterways and constructing 2,000 water ports. In addition, we are also constructing multi-modal hubs at Varanasi, Sahibganj and Haldia, which will have railways, highways and waterways.
Govt readies multi-modal transport play to reduce logistics costs
What is the reason behind holding the India Integrated Transport and Logistic Summit?
As part of an integrated approach, we are holding this conference together. Along with the state governments, we are also taking the ministries of commerce, agriculture, railways and aviation with us.
We are organizing the IITLS, which would be a platform for various stakeholders from the government, private sector and global experts to come together and discuss issues plaguing the logistics sector... The summit will also help to bring together the states to explore opportunities of improving transport and logistics in their respective regions. We are calling everyone.
Such an approach will also make goods cheaper in the country. Take the case of palmolein oil which comes from Malaysia to Haldia. Now, the distance between Haldia to Varanasi is 1,680km, with this oil transported by trucks. The idea is to open a refinery in Varanasi and transport it by a 5,000-tonne barge (through the inland waterway) rather than a 10-tonne truck... This will lead to the cost of palmolein oil coming down by Rs2 per litre.
What is the road ahead for electric vehicles (EVs)?
EVs, ethanol and bio-diesel are import substitutive, cost effective, pollution free and offer indigenous solutions...
We had a meeting recently. There has been considerable research done in the lithium ion cell. We have requested the finance minister that a policy is needed for electric car, electric bus which are pollution free and cost effective... It is under consideration with him.
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