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Multi-Modal Logistics Parks in India

Policy initiative

  • 6 min read
  • 3 chapters

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Through Government of India, Gross domestic product and World Bank Group

Since, in 2017, India had comparatively high logistics costs, 13% of total price of goods compared with 8% in other major economies and average 72% higher cost than China of exporting/importing a container in India. To make India globally competitive by reducing these costs and time, the MoRTH is developing multi-modal logistics parks at selected locations in the country under its Logistics Efficiency Enhancement Program (LEEP).

MMLP is officially defined as a freight-handling facility with a minimum area of 100 acres (40.5 hectares), with various modes of transport access, mechanized warehouses, specialized storage solutions such as cold storage, facilities for mechanized material handling and inter-modal transfer container terminals, and bulk and break-bulk cargo terminals. Logistics parks will also provide value-added services such as customs clearance with bonded storage yards, quarantine zones, testing facilities, and warehousing management services. Provisions will also be made for late-stage manufacturing activities such as kitting and final assembly, grading, sorting, labelling and packaging activities, re-working, and returns management.

As of July 2021, 35 MMLPs has been identified by MoRTH. Among those Bangalore, Chennai, Guwahati and Nagpur are under implementation, and the rest are in pre-planning and DPR is yet to be prepared.

Background

Expansion of logistics sector with India's economic growth

Keeping pace with India's rapid economic growth is the expansion of the country's logistics sector. The movement of freight in the country nearly doubled to around 2,300 billion ton-kilometers in fiscal year 2015 from 1,200 billion ton-kilometres in the fiscal year 2008. The government expects freight movement in the country to continue its growth trajectory, with expected annual growth of 8%–10% over the next 10 years. The logistics sector as a whole, according to a study commissioned by MoRTH, is poised to expand at roughly 1.2 times the rate of India's gross domestic product growth through 2032, by which time it is expected to generate $360 billion in value-added, up from $115 billion in 2017.

India's Logistics Performance Index score

In 2016, India managed to improve its performance in the Logistics Performance Index (LPI), a ranking published by the World Bank to measure the logistics performance of countries. India's LPI ranking rose to 38th in 2023, up from 54th in 2014. India witnessed a “spectacular rise” of 16 places in the Logistics Performance Index (LPI). India's ranking, however, still lags behind some of its economic peers, including other Asian countries. The best logistics performer in Asia is Singapore, which was ranked 5th in 2016, followed by Hong Kong, China (9th); Japan (12th); the Republic of Korea (24th); and the People's Republic of China (PRC) (27th). Among the grouping of so-called BRICS—comprising Brazil, Russia, India, the PRC, and South Africa—aside from the PRC, South Africa also outperformed India in 2016 with a ranking of 20th (World Bank, 2016).

India's National Logistics EMarket Place will empower India as a major logistics hub in the coming decade.

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