Logistics costs should fall to 10% of GDP
8 min read 05 Aug 2022, 12:05 AM ISTPetrol use will fall as the use of electric vehicles improves, and this will also reduce cost. Expectation is that in five years, logistics costs that stand at 16-18% of GDP in the country will come down to around 10%
PremiumNEW DELHI : India’s logistics costs as a percentage of the gross domestic product (GDP) are set to reach the levels of advanced economies such as the US, the European Union and China in about five years, offering massive efficiency gains to the economy. One driving force behind this change is the fast-paced growth of a world-class road network in the country.
The improved mobility provided by the web of highways and expressways is expected to spearhead the change and help in lowering logistics costs to 10% of GDP from the current 16-18%, said Union minister for road transport and highways Nitin Gadkari, the chief guest at the Mint Mobility conclave.
In an interview with Mint editor-in-chief Sruthijith K.K., the minister said a multi-modal approach to infrastructure development would reduce costs and improve mobility. Edited excerpts:
There is a lot of discussion about the cost of logistics as a percentage of GDP and how that is high in India. Minister of Railways Ashwini Vaishnaw said that logistics cost is lower using the railway network. So, one solution to lower logistics costs could be to shift more goods traffic to rail. You are the roads minister. Is that one of the solutions? What are the ways we can bring down costs?
A multi-modal approach to lowering logistics cost in India is being taken. This would include all forms of transportation, including roadways, railways, waterways, airways and linkages that each form will get through better connections. From the side of the roadways, we are connecting all ports. We are also making 16-lane highways and e-highways. Technology is also changing and facilitating the lowering of logistics costs. Like at Hazira, Gujarat, new LNG trucks are being piloted for transportation. I’m about to launch that. We will have LNG buses as well.
Petrol use will fall as the use of electric vehicles improves, and this will also reduce cost. My expectation is that in five years, logistics costs that stand at 16-18% of GDP in the country will come down to around 10%. This is how good our roads are.
Delhi-Mumbai road’s inauguration will happen in December-January, Delhi- Katra road as well. We have made roads from Amritsar to the port in Gujarat; all these developments aim to improve mobility in the country and reduce logistics costs.
Ethanol, at a certain level of purity, can replace aviation fuel. What kind of research is being done around that?
Yes, the research is underway. One of the companies has successfully tested technology for developing a highly purified form of ethanol from sugarcane juice. We now know that 99.5% ethanol can be converted into aviation fuel. Sugarcane juice is now being used to make ethanol and extra neutral alcohol. A third line will come up now that will make 99.5% purity ethanol, which actually will be the aviation fuel.
Indian Oil is now thinking of establishing one pilot project somewhere in India on this fuel. In Brazil, they are successfully doing it, and in due course, we will have the technology and our indigenous green fuel for aviation.
Road safety is a theme that is very close to your heart. You have pushed several initiatives such as the three-point seat belt for rear passengers, six airbags for cars carrying a certain number of people, and Bharat NCAP crash tests. What else are you thinking about, and are you happy with the implementation and the speed of the proposed initiatives?
Actually, this is the only dark area in my ministry. Every year, we have 500,000 accidents and 50,000 deaths. The death percentage is higher among 18-to-24-year olds, so we are losing young talented people in road accidents. We are trying our best to reduce road accidents. We are already improving the black spots. Also, we are taking decisions on a few important attributes that have the potential to reduce accidents. These include education, engineering, and emergency services. In Tamil Nadu, the state government, with the cooperation of the World Bank, successfully implemented the programme by which they reduced the number of accidents by 50% and death by 50%. Now in Bangalore, we have a big conference of transport ministers where again, policymakers would be sensitized to the need to make regulations that make Indian roads safer.
My mission is to reduce road accidents and deaths by 50% before the end of 2024. We have a programme with the World Bank and ADB of ₹14,000 crore. We are improving black spots; we are taking a lot of decisions with automobile engineering. Regarding the rules and regulations, we have already taken a lot of decisions. Still, road safety is the highest priority for all of us. We are doing our bit, but as far as the results and statistics are concerned, we have to do a lot more to make Indian roads safer.
Your ministry has raised penalties in the hope that it will encourage better driving. I think some states did not agree. Did that dissuade bad driving to an extent, or not really?
Road transport is on the Concurrent list. We have a new Motor Vehicle Act, but there is a problem because 50% of the subjects are with the central government and 50% are with the state governments. We have taken a lot of decisions, but we need cooperation from the state government for the improvement of the sector. So, we have the meeting in Bangalore, where we will discuss all the subjects and try our level best to bring about unanimity in all the policies which are also in the interest of the country and the society. I also feel that we will get cooperation from the people and will be in a position to save their lives.
How many kilometres of highways will get built this year? Is climate change slowing things down with more frequent floods, erratic monsoons and heat waves? Is this also slowing down the building of roads?
First of all, we are facing problems in road construction lately because of the unseasonal and extended run of monsoon. The problem is more acute for bitumen roads, as these get damaged easily during rains. I have just given one solution to the engineers; we can make a six-inch white topping on the bitumen road and, after that, make two-inch bitumen surfacing. This will prevent erosion of bitumen roads easily during rains. Once upon a time, I started to make all concrete roads, but my experience was bad. The cement industries’ cartelization created a problem as cement rates increased because maximum cement was purchased by NHAI for road construction. So, because of that situation, I changed my mind. But now, we are planning to make a six-inch white topping. It is a new technology. Its successful application will allow us to use the technology across all bitumen-surfaced roads.
Are you happy with how the industry and electric vehicle (EV) companies have responded in the wake of your interventions and directions regarding cases of EVs catching fire?
Yes, they have taken the decision and recalled vehicles. We had a hard discussion with EV makers. We are very much sensitive about the life of the people, but at the same time, you should understand this is a new technology. Even globally, we don’t have standards for these new innovations. The chemistry of batteries is also changing from lithium-ion to aluminium ion, sodium ion etc. Now we are going for aluminium technology. So, new experimental instruments are there, but we need some time to rectify the technology and some time to standardize the regulations. It is a process. We don’t want to support people who are taking advantage of the law, but at the same time, we have to encourage the people to use new technology, new innovation and research; otherwise, our strong action will stop all the initiatives and all the new policies and new technologies.
Are the difficulties which you faced in travel in the early part of your life play a role in you taking an interest in making travel and commuting easier for others?
American President John F. Kennedy once said that the American roads are not good because America is rich. America is rich because American roads are good. When Atalji was the Prime Minister, he used to blame me that I was only making city roads and not village roads. So, he instructed me to make a plan for all roads. So, the flagship yojana we have today, PM Gram Sadak Yojana, took birth. This has transformed the rural infrastructure and raised the country’s GDP by about ₹1 trillion. And today, we have united 45,000 villages. With the work that Atalji started, his dream has come true. And the rural infrastructure in India has transformed. Now, we are transforming that urban and countrywide highway landscape too, and this is being done at a fast pace.
Very impressive roads are being made now, but it’s also true that there is some distress in the sector. Some people have bid for roads but are now unable to complete them. Is this widespread or contained, and what’s the government doing about this?
Since I have taken charge, I’ve completed over ₹60 trillion worth of chronic projects. I used to stay late with bankers and officials and brainstorm problems. We obtained clearance and made rules around it. So, if 90% land isn’t obtained, we don’t award the project. By doing so, the problems in the sector have been reduced. But still, problems are there. So, I have suggested that if one developer fails, then assign the project to another better one. One thing is that we are transparent, time-bound, result-oriented and free of corruption.
What is the progress on building infrastructure along our long borders?
We’re making roads around all our borders. Only in Jammu-Kashmir, a ₹65,000 crore tunnel is being made. All of Kashmir is changing. On the Jammu to Srinagar Road, we are making six tunnels. In Bhutan, Nepal, and Myanmar, we are making roads all over for better trade. In Arunachal, we’re making a 1,300 km trans-Arunachal highway. Anywhere you go in the Northeast, you’ll find work being done.
