The Union Minister for Road Transport and Highways recently laid the foundation stone for the nation’s debut MultiModal Logistics Park (MMLP) in Jogighopa, Assam. This significant move is stirring attention due to its potential to stimulate trade, increase logistics efficiency, and bolster economic development in the region.
About MultiModal Logistics Park
The MMLP is a project under the Government of India’s umbrella programme for the highways sector, Bharatmala Pariyojana, steered by the Ministry of Road Transport and Highways. The plan involves setting up MultiModal Logistics Parks in 35 locations with a focus on decreasing congestion on proposed economic corridors, enhancing logistic competency, and slashing freight movement costs. The park will be directly linked to National Highway 17, the proposed Jogighopa waterway terminal on Brahmaputra, Rupsi and Guwahati airports, as well as major railway routes.
The park will feature all necessary amenities including warehouses, railway siding, cold storage, custom clearance house, workshops, petrol pumps, administrative building, boarding and lodging facilities, eateries, water treatment plant, and truck parking. It has an anticipated cargo capacity of 13 million metric tons (MMT) per year, expected to cut trade cost by 10%. The move is set to fuel economic growth in Assam and the northeast, providing employment to nearly 20 lakh individuals.
Logistics Sector Overview
According to Asian Development Bank (ADB), the Indian logistics industry is projected to touch USD 215 billion in 2020. Expected to grow at a rate surpassing that of India’s GDP until 2032, it could generate added value worth USD 360 billion. In 2017, logistics was declared an “infrastructure” sector, making it easier to acquire debt, access external commercial borrowings, and receive longer tenor funds from insurance and pension funds.
Despite its potential, the Indian logistics sector encounters several hurdles leading to high cost and reduced efficiency. For instance, road freight cost in India is approximately twice that of the United States, while freight vehicle speed is about 50%-60% slower.
Government’s Initiatives
To address these challenges, the Ministry of Commerce and Industry is mulling over replacing the Multi-Modal Transportation of Goods Act (MMTG), 1993 with a comprehensive national logistics law to foster sector growth. A draft of the National Logistics Policy was publicized in February 2019, with the key objective to reduce logistics cost as a percentage of GDP to roughly 10%. The policy also aims to optimize the modal mix, bolster last-mile connectivity, and augment the logistics value chain via digitization, standardization, and warehousing modernization.
The establishment of MMLPs at strategic locations is a fundamental policy measure to rationalize logistics costs and enhance India’s competitiveness. These parks perform five main functions: freight aggregation and distribution, multimodal freight transport, integrated storage and warehousing, info-tech support, and value-added services.
