Table of Contents

1. Introduction to the Infrastructure sector

2. Infrastructure sectors in India
a. Roadways
b. Railways
c. Aviation
d. Ports and Shipping
3. SWOT Analysis of the Infrastructure sector
4. Major players in the Infrastructure sector
5. Various Government initiatives for the Infrastructure sector
a. NIP
b. Atal Mission for Rejuvenation & Urban Transformation
c. Smart City Mission
d. Pradhan Mantri Awas Yojana (Urban)
e. Pradhan Mantri Awas Yojana (Gramin)
6. Way forward in the Infrastructure sector
7. Introduction to Logistics sector in India
a) Logistics sector in India
a. Major players in the Logistics sector
b. Logistics Models
9. PESTLE Analysis of Logistics Sector
a) Overview
b) Challenges in the Logistics sector
c) New Developments in the field of Logistics
10. Way forward in the logistics sector
 Table of Contents

1. Introduction to the Infrastructure Sector….………………………. …. 3 - 4

2. Infrastructure Sectors in India ………………...……………………...... 5 - 15

2.1 Roadways………….......…………………..………………………... 5
2.2 Railways……………………………………….……………………. 7
2.3 Aviation……………………………………………………………… 10
2.4 Port and Shipping…….……………………………………………… 13

3. SWOT Analysis of the Infrastructure Sector……………………………16

4. Major Players in the Infrastructure Sector……………………………... 17

5. Various Government initiatives for the Infrastructure Sector………. 18 - 23

5.1 National Infrastructure Program (NIP)……….……………………... 18
5.2 Atal Mission for Rejuvenation & Urban Transformation (AMRUT).. 19
5.3 Smart City Mission………………………………………………….. 20
5.4 Pradhan Mantri Awas Yojana (Urban)……………………………… 22
5.5 Pradhan Mantri Awas Yojana (Gramin)………………....................... 23

6. Way forward in the Infrastructure Sector…………………………........ 24 - 26

7. Introduction to Logistics Sector in India……………………...………… 27 - 32

7.1 Logistics Sector India…………………………………………….… 27
7.2 Major Players in the Logistics Sector……………………………….. 31
7.3 Logistics Models…………………………………………………….. 32

8. PESTLE Analysis of Logistics Sector…………………………………… 33 - 35

8.1 Overview………………………………………………………..….. 33
8.2 Challenges in the logistics sector…………………………………... 34
8.3 New Developments in the Field of Logistics……………………….. 35

9. Way Forward in the Logistics Sector……………………………............ 36 - 38

 1 Introduction to the Infrastructure Sector

Infrastructure sector is a key driver for the Indian economy. The sector is highly
responsible for propelling India’s overall development and enjoys intense focus from
Government for initiating policies that would ensure time-bound creation of world class
infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads,
and urban infrastructure development.

Increased impetus to develop infrastructure in the country is attracting both domestic and
international players. The Public Private Partnership (PPP) model introduced by the Indian
Government in the sector has attracted domestic as well as foreign investment and
stimulated the growth of the Indian Economy. PPPs have been identified as the most
suitable mode for the implementation of projects and indeed, are rapidly becoming the
funding norm. Private sector is emerging as a key player across various infrastructure
segments, ranging from roads and communication to power and airports.

The real estate sector is closely related to infrastructure and is fundamental to its growth.
Real estate sector in India is expected to reach a market size of USD 1 trillion by 2030
from USD 120 billion in 2017 and contribute 13% of the country’s GDP by 2025. In
Union Budget, the government gave a massive push to the infrastructure sector by
allocating INR 233,083 crore to enhance the transport infrastructure. The government
expanded the NIP to 7,400 projects, 217 projects worth INR 1.10 lakh crore were
completed as of 2020.

Importance of Infrastructure Sector

A balanced
Better quality
Infrastructure infrastructure
and quantity
sector has one development Infrastructure
can directly Infrastructure
of the highest Infrastructure promotes has huge
raise the sector helps in
employment sector helps in regional positive spill
productivity of increasing
which means poverty equality and over effects to
human and manufacturing
massive reduction reduces other sectors of
physical capital growth
employment regional and the economy
and hence
generation inter state
growth
disparities

Approximately 280 tunnels with a total length of 890 km are estimated to be completed by 2021-22, and
another 137 tunnels consisting of a total length of more than 630 km are scheduled to be completed by
2026.

3
 Economic contribution of the Infrastructure sector is based on the following
factors :

1. Robust Demand
• India is expected to become the third-largest construction market globally by 2022
• India has a requirement of investment worth INR 50 trillion across infrastructure by
2022 for a sustainable development in the country.
2. Policy Support
• Initiatives like ‘Housing for All’ and ‘Smart Cities Mission’, the Government of
India is working on reducing bottlenecks and impeding growth. The government
has invested INR 2.05 lakh crore in the smart cities mission.
• 100% FDI is permitted under the automatic route in various infrastructure sectors.
3. Attractive Opportunities
• Only 24% of the National Highway network in India is four-lane, therefore there is
an immense scope for improvement.
• The Regional Connectivity Scheme (RCS) gives opportunity for development of
airports
4. Increasing Investment
• Huge investments in infrastructure have provided momentum to overall PE/VC
investments in India.
• Construction development sector and infrastructure activities sector received FDI
inflows amounting to USD 25.78 billion and USD 17.22 billion, respectively,
between April 2000 and September 2020.

Infrastructure Sector of India

Source: KPMG

India plans to construct 40 kilometers of highways every day in the current financial year, beating its
daily record of 37 km that was constructed during 2019-20.

4 4
 2 Infrastructure Sectors in India

2.1 Roadways

Overview

India has the second-largest road network in the world, spanning a total of 5.89 million
kilometers (kms). This road network transports 64.5% of all goods in the country and 90%
of India’s total passenger traffic uses road network to commute. Road transportation has
gradually increased over the years with continuous improvement in connectivity between
the cities, towns and villages in the country. In India, sale of automobiles and movement
of freight by roads is growing at a rapid rate. National Highways Authority of India
(NHAI) has accomplished the construction of 3,951 kms of national highways in the
financial Year 2020-21, one of the highest highway construction achieved in a financial
year. The construction pace as noticed in the last few years has seen steady growth with
3,380 km construction in the FY 2018-19. India also has a well-developed framework for
Public-Private-Partnerships (PPP) in the highway sector.

Demand Drivers of Roadways in India

• Production of commercial vehicles increased to 7,52,022 in FY20 from FY16 at a CAGR of 2.42%
commands stronger roads network in India
• In FY21, 13,298 Kms of highway was constructed in India
Robust • In November 2020, passenger vehicle wholesale expanded by 9%, compared to same month last year due to
Demand increased demand in festive season

• The government aims to construct 65,000 Kms of national highways at cost of INR 5.35 Lakh crore by 2020
• The government aims to construct 23 new national highways by 2025
Attractive • Road building in India is the 2nd least expensive in India.
Opportunity

• Growing participation of PPP

• Under the Union Budget 2021-22, Indian Government has allocated INR 1,08,230 crores to the Ministry of
Road Transport and Highways
Higher • Transfer of National Investment Fund (NIF) was estimated at INR 6,070 crore for 2019-20
Investment

• Financial Institutions got government’s approval to raise money by tax-free bonds

• 100% FDI is allowed under automatic route subject to applicable laws and regulations
Policy • The changes made in the Finance Bill 2019 now states that Central government will be responsible for
formulating criteria for any state road project
Support
Source: IBEF.org

The Finance Bill 2019 made certain changes in the Central Roads and Infrastructure Fund Act. The central
Government will now be responsible for formulating criteria for any state road project.

5
5
 Market Size

• Highway construction in India increased at 17.00% CAGR between FY16-FY21.

Despite pandemic, India has constructed 13,298 km of highways in FY21.
• In May 2021, the Ministry of Road Transport and Highways constructed 1,470 kms of
national highways. In October 2020, the foundation was established for 9 National
Highway projects with a total length of 262 kms worth INR 2752 crore in Tripura.
• Government allocated INR 111 lakh crore under the National Infrastructure Pipeline
(NIP) for FY19-FY25. The roads sector is likely to account for 18% capital
expenditure over FY19-FY25.
• In October 2020, The National Investment and Infrastructure Fund (NIIF) is making
progress towards integrating its road and highway portfolio. The NIIF has acquired
Essel Devanahalli Tollway and Essel Dichpally Tollway through the NIIF master fund.
• Government has successfully rolled out over 60 projects worth over $10 bn based on
the Hybrid Annuity Model (HAM). HAM has balanced risk appropriately between
private and public partners and boosted PPP activity in the sector.

Government Initiatives

Source: IBEF.org

In May 2020, Asian Development Bank (ADB) and Government of India signed a USD 177 million loan to
upgrade 450 km of state highways and major district roads in the state of Maharashtra

6 6
 2.2 Railways

Overview

Indian Railways is among the world’s largest rail network, and its route length network is
spread over 67,956 kms, with 13,169 passenger trains and 8,479 freight trains, plying 23
million travelers and 3 million tones (MT) of freight daily from 7,349 stations. India's
railway network is recognized as one of the largest railway systems in the world under
single management. The railway network is also ideal for long-distance travel and
movement of bulk commodities, apart from being an energy efficient and economic mode
of conveyance and transport. Indian Railways is the preferred carrier of automobiles in the
country. Government of India has focused on investing in railway infrastructure by
making investor-friendly policies. It has moved quickly to enable Foreign Direct
Investment (FDI) in railways to improve infrastructure for freight and high-speed trains.
At present, several domestic and foreign companies are also looking to invest in Indian
rail projects.

Market Size

• Revenue growth has been strong over the years. Indian Railways’ gross revenue stood
at INR 1,74,660 crore in FY20. Freight earnings in FY20 stood at INR 1,13,488 crore.
• Passenger earnings for Indian Railways was at INR 50,669 crore in FY20. The total
passenger revenue between April 20-Feb 21 stood at INR 12,410 crore.

Demand Drivers of Railways in India

• Increasing urbanization and rising income are driving growth in the passenger segment
• Growing industrialization across the country has increased freight traffic in the last decade
Growing • India is projected to account for 40% of the total global share of rail activity by 2050
Demand

• Freight traffic is set to increase significantly due to rising investments and private sector participation
Opportunit • Metro rail projects are being envisaged across many cities over the next 10 years
y

• FDI inflows in railway related components stood at USD 1.12 billion from April 2000 to September 2020
• Investment in railway infrastructure is estimated to increase from USD 58.96 billion to USD 124.13 billion
Higher • It’s estimated that railway infrastructure would need investment of INR 50 lakh crore between 2018-3000
Investment

• Government has increased the scope of PPP and it is being utilized in areas such as redevelopment of stations,
building private freight terminals and private container train operations.
Policy • Government has allowed 100% FDI in the railway sector
Support • Government has rolled out a new Iron Ore Policy governing allocation of rakes & transportation of iron ore

Source: IBEF.org

In June 2020, Railways created a new world benchmark by commissioning first high rise Over Head
Equipment (OHE) with a contact wire height of 7.57 meter and successfully running double stack
containers in electrified territory on Western Railway.

7 7
 • In FY20-21, Indian Railways recorded the highest loading in freight transportation.
Freight traffic carried by Indian Railways stood at 1,233 million tones in FY21. With
this, the freight revenue of Indian Railways also increased to INR 1,17,386 crore.
• Since August 2020, the Indian Railways has run 450 Kisan Rail services and was able
to transport over 1.45 lakh tones of agricultural produce & perishables.
• RailTel, a PSU under the Railway Ministry, which provides fast and free Wi-Fi across
the Indian Railways network, announced its highest ever consolidated income of INR
11,660 million for FY19-20. This income figure is a growth of 12.3% over the
consolidated income of the financial year FY18-19.
• In Nov 2020, Railways announced that 40% of Dedicated Freight Corridor (DFC) will
be opened for traffic by end of FY21, while the 2,800 km route will be completed by
June 2022.
• India was among the top 20 exporters of railways globally as of 2017. India’s export of
railways has grown at a CAGR of 31.51% during 2010-2018 to USD 508 million.
Exports of railways in 2019E stood at USD 635 million.
• As of May 2021, the Indian Railways loading stood at 73.5 million tones (MT)
including 35.6 MT (coal), 9.8 MT (iron ore), 3.4 MT (food grains), 2.2 MT (fertilizers)
and 3.2 MT (cement, excluding clinker).

Government Initiatives in the Railways Sector

• In June 2021, the Government approved implementation of a 235 km semi high-speed

rail corridor between Pune and Nashik with a cost of INR 16,039 crore and approved
INR 25,000 crore for a 5-year plan to use 4G technology to modernize communication
networks in railway stations and improve the safety and security of train journeys.
• Indian Railways has logged the highest ever electrification of sections covering 6,015
Route Kilometer (RKM) in a single year during 2020-21. More than 5 times
electrification was achieved during (2014-21) last seven years as compared to during
2007-14.
• In April 2021, Indian Railways completed the arch closure of the under-construction
Chenab Bridge which is the world’s highest railway bridge. Chenab Bridge is 1,315 m
long. The total cost of the bridge is estimated to be INR 1,486 crore and the design life
is said to be 120 years.
• In February 2021, Indian Railways called for ‘Request for Qualification (RFQ)’ for
redeveloping New Delhi railway station under a public-private partnership, with an
estimated project cost of INR 5,000 crore.
• 2 dedicated freight corridors are under construction:
Western Dedicated Freight Corridor connecting Delhi and JNPT (Mumbai)1,504 kms
Eastern Dedicated Freight Corridor connecting Amritsar and Kolkata 1,856 kms

India is keen on manufacturing and exporting bullet train coaches to possibly bring down the operating
cost of Shinkansen trains. For the upcoming Mumbai-Ahmedabad bullet train project, 24 bullet train sets
are planned to be acquired from Japanese companies through tendering process

8 8
 Indian Railways – New India’s Growth Journey

Freight Traffic (million tonnes)

Source: Invest India

Dedicated Freight Corridors

Source: Invest India

High Speed Rail Corridors

Revenue breakdown by segment

Source: Invest India

Source: Invest India

Source: Invest India

Foreign Direct Investment (FDI) Inflow in railway-related components stood at US$ 1.23 billion from
April 2000 to March 2021.

9 9
 2.3 Aviation

Overview

The civil aviation industry in India has emerged as one of the fastest growing industries in
the country during the last three years. India has become the third largest domestic
aviation market in the world and is expected to overtake UK to become the third largest
air passenger market by 2024. To cater to the rising air traffic, the Government of India
has been working towards increasing the number of airports. As of 2020, India had 153
operational airports. India has envisaged increasing the number of operational airports to
190-200 by FY40. Further, the rising demand in the sector has pushed the number of
airplanes operating in the sector. The number of airplanes is expected to reach 1,100
planes by 2027.

Market Size

• India’s passenger traffic stood at 115.4 million in FY21.

• Domestic and international passenger traffic declined at CAGR of -9% and -29%,
respectively, from FY16 to FY21, owing to COVID-19-related restrictions on flights in
FY21.
• Between FY16 and FY21, freight traffic declined at a CAGR of -1.8% from 2.7
million tones (MT) to 2.5 MT.

Demand Drivers of Aviation in India

• Rising working groups and widening middle class demography is expected to boost demand
• India has envisaged increasing the number of operational airports to 190-200 by FY40
Robust • Country will become the 3rd largest aviation market in terms of passenger by 2024
Demand • India will need 2380new commercial airplanes by 2038

• Growth in aviation accentuating demand for MRO facilities

• Expenditure in MRO accounts for 12-15% of the total revenue; 2nd highest expense after fuel cost
Opportunities • By 2028, the MRO industry is likelyto grow over USD 2.4 billion from USD 800 million in 2018
in MRO

• FDI inflows in railway related components stood at USD 1.12 billion from April 2000 to September 2020
• Investment in Railway’s infrastructure is estimated to increase from USD 58.96 billion to USD 124.13
billion
Increasing • It is estimated that Railway’s infrastructure would need investment of INR 50 lakh crore between 2018-
Investment 3000

• Foreign investment up to 49% is allowed under automatic route in scheduled air transport service,
regional air transport service and domestic scheduled passenger airline
Policy • Under union budget 2021-22, government lowered the custom duty from 2.5% to 0% components
Support or parts including engines for aircraft manufacturing by public sector units

Source: IBEF.org

Indian airports are emulating the SEZ-aerotropolis model to enhance revenues from retail, advertising,
vehicle parking, etc. With the initiative of displaying “Art for a cause,” Nagpur airport became India’s
first airport to take up the cause of empowering the girl child.

10 10
 • In FY21, airports in India pegged the domestic passenger traffic to be 105.2 million, a
61.7% YoY decline, and international passenger traffic to be 10.1 million, an 84.8%
YoY decline, over the fiscal year ended March 31, 2020.
• In March 2021, the average daily passenger traffic stood at 5,46,703.
• Aircraft movement declined at a CAGR of -7.79% from 1.60 million to 1.20 million in
FY21.

Investments in the field of Aviation Sector

FDI inflow in India’s air transport sector (including air freight) reached USD 2.95 billion
between April 2000 and March 2021. The government has allowed 100% FDI under the
automatic route in scheduled air transport service, regional air transport service and
domestic scheduled passenger airline. However, FDI over 49% would require government
approval. India’s aviation industry is expected to witness INR 35,000 crore investment in
the next 4 years. The Indian Government is planning to invest US$D 1.83 billion for
development of airport infrastructure along with aviation navigation services by 2026.

• On March 25, 2021, Civil Aviation Minister inaugurated the Kurnool Airport, in a
virtual ceremony. The flight operations at Kurnool airport will commence under the
Regional Connectivity Scheme – Ude Desh Ka Aam Nagrik (RCS-UDAN).
• On February 25, 2021, the Airports Authority of India (AAI) issued tenders for
construction of the first phase of an international airport at Dholera in Gujarat,
entailing an investment of INR 987 crore. The new facility is being set up in greenfield
city under the Delhi–Mumbai Industrial Corridor (DMIC) project at Dholera.

Government Initiatives in the Aviation Sector

• On May 08, 2021, AAI commenced commercial operations at Rupsi airport—

Northeast India’s 15th airport and Assam’s 7th airport.
• In March 2021, on the launch of ‘Azadi Ka Amrit Mahotsav (India@75)’ the
Government has proposed 392 routes under the UDAN 4.1 bidding process.
• The government is planning to start 14 more water aerodromes across the country,
• In September 2020, the Government sanctioned INR 108 crore for Jagdalpur,
Ambikapur and Bilaspur airports in Chhattisgarh under the UDAN scheme
• Under Union Budget 2021-22, government expanded the scope for ‘Krishi Udaan’ in
convergence with Operation Green Scheme, wherein air freight subsidy of 50% for
agri-perishables would be provided to North East states and 4 Himalayan states/UTs.
This will boost the ‘Krishi Udaan’ scheme and improve air cargo transportation from
these states.
• In February 2019, the Government of India sanctioned the development of a new
greenfield airport in Hirasar, Gujarat, with an estimated investment of INR 1,405 crore.

To cater to the rising air traffic, the Government of India has been working towards increasing the number
of airports. As of March 2019, India had 103 operational airports. India has envisaged increasing the
number of operational airports to 190-200 by FY40.

11 11
 Notable trends in Aviation Sector

Source: IBEF.org

Key Airlines Operating in India

International & Domestic Passenger

Traffic

Source: IBEF.org

Source: IBEF.org

Air India Asset Holding Ltd, a special purpose vehicle (SPV), was set up in 2018 as part of the financial
restructuring of the debt-laden national carrier. In the Budget for 2021-22, Rs 2,268 crore is proposed to
be allocated for the SPV. Air India's accumulated losses rise to ₹70,820 crore.

12 12
 2.4 Shipping and Ports

Overview

According to the Ministry of Shipping, around 95% of India's trading by volume and 70%
by value is done through maritime transport. In November 2020, the Prime Minister, Mr.
Narendra Modi renamed the Ministry of Shipping as the Ministry of Ports, Shipping and
Waterways.

India has 12 major and 205 notified minor and intermediate ports. Under the National
Perspective Plan for Sagarmala, six new mega ports will be developed in the country. The
Indian ports and shipping industry play a vital role in sustaining growth in the country’s
trade and commerce. India is the sixteenth-largest maritime country in the world with a
coastline of about 7,517 kms. The Indian Government plays an important role in
supporting the ports sector. It has allowed Foreign Direct Investment (FDI) of up to 100%
under the automatic route for port and harbor construction and maintenance projects.

India’s key ports had a capacity of 1,534.91 million tones per annum (MTPA) in FY20. In
FY21, all key ports in India handled 672.60 million tones (MT) of cargo traffic.
Merchandise exports reached US$ 290.63 billion in FY21. The Government has taken
several measures to improve operational efficiency through mechanization, deepening the
draft and speedy evacuations.

Demand Drivers of Shipping & Ports in India

• In FY20. major ports in India handled 704.82 million tones of cargo traffic implying a CAGR
Robust 2074% in FY16-20.
Demand

• Total investment in Indian ports is estimated to reach US$ 43.03 billion in 2020
• The key ports are expected to deliver 7 projects worth INR 2,000 crore on a PPP basis in FY22
Attractive • The Finance Minister proposed to double the ship recycling capacity of 4.5 million light displacement
Opportunities tones (LDT) by 2024; expected to generate an additional 1.5 lakh employment opportunities in India.

• India has a coastline which is more than7,517 kms long, interspersed with more than 200 ports
• Most cargo ships that sail between East Asia and America, Europe and Africa pass through Indian
Competitive territorial waters
Advantage

• In Union Budget the government announced subsidy funding worth INR 1,624 crores to Indian
shipping companies to encourage merchant ship flagging in the country
Policy • In February 2021, the Major Port Authorities Bill, 2020 was passed the parliament. The bills aims
Support to reorient the governance model in central ports to align with international best practices
Source: IBEF.org

The cargo traffic at Paradip Port Trust grew 3.1% YoY to 112 million metric tones (MMT) while the cargo
traffic at Vishakhapatnam Port Trust grew 11.4% YoY to 72 MMT

13 13
 Investments/Developments in the Shipping and Ports sector

• In April 2021, Adani Ports signed an agreement with Vishwa Samudra Holdings Pvt.
Ltd., to acquire 25% stake of Adani Krishnapatnam Port Limited (Krishnapatnam Port)
for a consideration of Rs. 2,800 crore (US$ 226.4 billion).
• In March 2021, Adani Ports announced to partner with John Keells Holdings and Sri
Lankan Ports Authority to develop and operate the West Container Terminal of the
Colombo Port in Sri Lanka for 35 years.
• In February 2021, Jawaharlal Nehru Port Trust (JNPT) launched a comprehensive
solid waste management project as a part of its green port initiatives.
• In November 2020, Mormugoa Port Trust (MPT), operator of the western Indian port
of Mormugoa, extended concessions on iron ore imports and export freight traffic until
June 2021 to help ease India's iron ore shipping trade amidst the COVID-19 pandemic.
• October 2020, Adani Ports and Special Economic Zone Limited (APSEZ) completed
the acquisition of Krishnapatnam Port Company Ltd. (KPCL) for an enterprise value
of INR 12,000 crore
• In July 2020, Adani Ports and Special Economic Zone (SEZ) Ltd, launched an
offshore bond offering, raising USD 750 million.
• In January 2020, DP World launched a new rail service between Kochi and Bangalore
to lower costs and reduce transit time between the two cities by >40%.

Government Initiatives in the Shipping and Ports sector

• In June 2021, Ministry of Ports, Shipping & Waterways & Ministry of Culture signed
an MoU for cooperation in development of National Maritime Heritage Complex at
Lothal, Gujarat
• In June 2021,Ministry of Ports, Shipping and Waterways and Ministry of Civil
Aviation signed a memorandum of understanding (MoU) to develop sea plane services
in India.
• On May, 2021, JNPT and New Mangalore Port handled 120 tones of medical oxygen
on a priority basis owing to the COVID-19 pandemic.
• In Union Budget 2020-21, the allocation for the Ministry of Shipping was INR
1,702.35 crore.
• in February 2021, the Major Port Authorities Bill, 2020 was passed by the Parliament
of India. The bill aims to decentralize decision-making and reinforce excellence in
major port governance.
• The Finance Minister proposed to double the ship recycling capacity of ~4.5 million
light displacement tones (LDT) by 2024; this is expected to generate an additional 1.5
lakh employment opportunities in India.

Ports in India handle almost 95% of trade volumes in India. Solid cargo contributes the largest share to
all traffic handled at major ports in India followed by liquid cargo and containers.

14 14
 Road Ahead

Increasing investment and cargo traffic point towards a healthy outlook for the Indian
ports sector. Providers of services such as operation and maintenance (O&M), pilotage
and harboring and marine assets such as barges and dredgers are benefiting from these
investments. The capacity addition at ports is expected to grow at a CAGR of 5-6% till
2022, thereby adding 275-325 MT of capacity. India’s cargo traffic handled by ports is
expected to reach 1,695 million metric tones by 2021-22 according to a report by the
National Transport Development Policy Committee.

India Maritime Summit 2021: Prime Minister Shri Narendra Modi inaugurated
‘Maritime India Summit 2021’ through video conferencing on 2nd March 2021. Minister
of Transport of Denmark Mr. Benny Englebrecht, Chief Ministers of Gujarat and Andhra
Pradesh, and various ministers were present. Prime Minister released e-book of ‘
Maritime India Vision-2030’. Maritime India Vision 2030 is aiming to make the Indian
Maritime Industry at par with top global benchmarks in next 10 years. Prime Minister also
unveiled the e-plaque of ‘Sagar-Manthan’: Mercantile Maritime Domain Awareness
Centre(MM-DAC). It is an information system for enhancing maritime safety, search and
rescue capabilities, security and marine environment protection.

Maritime India Summit 2021

Source: IBEF.org

Ports sector in India has received a cumulative FDI worth US$ 1.64 billion between April 2000 and
March 2021.

15 15
 3 SWOT Analysis of the Infrastructure sector

Private sector is emerging as a key player across various infrastructure segments, ranging
from roads and communications to power and airports. Private investment into physical
and social infrastructure is key to putting India in a high growth trajectory, which will
make it a US$ 5 trillion economy by 2024-25. Yearly private equity (PE) and venture
capital (VC) investment in India is expected to surpass US$ 65 billion in 2025. In Union
Budget 2021, the government has given a massive push to the infrastructure sector by
allocating INR 233,083 crore to enhance the transport infrastructure. The government
expanded the ‘National Infrastructure Pipeline (NIP)’ to 7,400 projects. 217 projects
worth INR 1.10 lakh crore were completed as of 2020. FDIs in the construction
development (townships, housing, built-up infrastructure and construction development
projects) and construction (infrastructure) activity sectors stood at USD 25.78 billion and
USD 23.99 billion, respectively, between April 2000 and December 2020.

▪ Construction development sector & ▪ Construction development sector &

infrastructure activities are getting infrastructure activities are getting heavy

OPPORTUNITIES
heavy FDI inflow. FDI inflow.
STRENGTHS

▪ Under Pradhan Mantri Awas Yojana ▪ Under Pradhan Mantri Awas Yojana
over 8.1 billion houses have been over 8.1 billion houses have been made
made in the last 5 years. in the last 5 years.
▪ Funding & development of ▪ Funding & development of
infrastructure through on off budget infrastructure through on off budget
sources and PPP sources and PPP
▪ Infrastructure getting harnessed by ▪ Infrastructure getting harnessed by stable
stable and stimulating policy and stimulating policy decisions.
decisions
SWOT
ANALYSIS
▪ Red tape, lack of transparency and ▪ Lack of structured regulatory & policy
framework or well defined operating
WEAKNESS

bureaucratic hurdles will threaten the

THREATS

growth of the sector serving as the and financing regulations

economic backbone. ▪ Low levels of domestic expertise
▪ Inadequate system for compensation stemming from a shortage of skilled
and environmental approvals is project managers and engineers
slowing investments ▪ Delay in absorption of funds and
▪ Burgeoning population needs rapid deterring investors
urbanization and infra development ▪ Pandemic has hindered supply chains
and halted development process

Under RCS-Udan scheme, approximately 34,74,000 passengers were flown and 335 routes were awarded
during 2019, covering 33 airports .As on October 2019, 55 AAI airports were declared as Single-Use
Plastic Free Airport Terminals.

16
16
 4 Major Players in the Infrastructure Sector

• The Reliance Infrastructure Limited: R-Infra is one of the largest infrastructure

companies, developing projects through various Special Purpose Vehicles (SPVs) in
several high growth sectors such as power, roads, metro rail and airport in the
infrastructure space and the defense sector.
• GMR Group: It is one of the fastest growing infrastructure enterprises in India with a
rich and diverse experience spanning three decades. It has been developing projects in
high growth areas such as Airports, Energy, Transportation and Urban Infrastructure.
• IRB Infrastructure Developers Limited: It is a road build, operate and transfer
(BOT) operator. The company's principal activity is the construction and maintenance
of roads. Its business segments include road infrastructure projects, which includes
development and operation of roadways, real estate.
• Larsen and Toubro: Major Projects include Hyderabad Metro Rail, Construction of a
6- lane bridge over the Ganges river, Mechanize Track Laying for India's first 626 km,
Dedicated Freight Corridor, Monorail in Mumbai, Railway electrification works, Rigid
Overhead Contact System for the Delhi Metro, Kakrapar nuclear power project and
Srinagar Hydel Power Project, Uttaranchal.
• Jaiprakash Associates Limited: Jaiprakash Associates Limited is a public listed
infrastructure company and it is a part of Jaypee Group of Indian Corporation. JAL was
founded in 1979. It undertakes various infrastructure projects like Power, roads,
hospitality, real estate and sports.
• Hindustan Construction Company: Hindustan Construction Company was founded
in 1926. HCC is Winner of Global Sustainability Leadership Award. HCC stands
among oldest infrastructure companies in the country and it undertakes various
projects like expressways, bridges, tunnels and power etc.

Major Payers in the Infrastructure Sector

Source: IBEF.org

With initiatives like ‘Housing for All’ and ‘Smart Cities Mission’, the Government of India is working on
reducing bottlenecks and impeding growth in the infrastructure sector Rs 2.05 lakh crore (US$ 31.81
billion) will be invested in the smart cities mission.

17
17
5 Various Government Initiatives for the Infrastructure Sector

5.1 National Infrastructure Pipeline (NIP)

The Ministry of Finance released the Report of the Task Force on National Infrastructure
Pipeline for 2019- 2025 in the public domain. India needs to spend USD 4.5 trillion on
infrastructure by 2030 to sustain its growth rate. The government has announced that
infrastructure projects worth INR 102 lakh crores will be implemented by2025.

• NIP includes economic and social infrastructure projects.

• During the fiscals FY20-25, sectors such as Energy (24%), Roads (19%), Urban
(16%), and Railways (13%) amount to around 70% of the projected capital expenditure
• Plans to invest more than ₹102 lakh crore on infrastructure projects by 2024-25, with
the Centre, States and the private sector to share the capital expenditure.

Key benefits of NIP

• Economic: NIP will enable more infra projects, grow businesses, create jobs, improve
ease of living, and provide equitable access to infrastructure for all, making growth
more inclusive.
• Government: Well-developed infrastructure enhances the level of economic activity,
creates additional fiscal space by improving the revenue base of the government, and
ensures the quality of expenditure focused in productive areas.
• Banks/Financial Institutions (F1s)/Investors: Builds investor confidence as
identified projects are likely to be better prepared, exposures less likely to suffer stress
given active project monitoring, thereby less likelihood of NPAs.

Infrastructure Vision 2025

Source: Civildaily

To draw the NIP, all the economic and social infrastructure projects as per the Harmonized Master List of
Infrastructure was taken up and the projects have been identified. This, first of a kind exercise, is expected
to be followed up by a periodical reviewprocess.

18
18
 5.2 Atal Mission for Rejuvenation & Urban Transformation (AMRUT)

Overview

The Government of India has launched the Atal Mission for Rejuvenation and Urban
Transformation (AMRUT) with the aim of providing basic civic amenities like water
supply, sewerage, urban transport, parks as to improve the quality of life for all especially
the poor and the disadvantaged. The focus of the Mission is on infrastructure creation that
has a direct link to provision of better services to the citizens.

• Ensure that every household has access to a tap with assured supply of water and a
sewerage connection
• Increase the amenity value of cities by developing greenery and well maintained open
spaces e.g. parks.
• Reduce pollution by switching to public transport or constructing facilities for non-
motorized transport e.g. walking and cycling.

The universal coverage of water supply and sewerage services have first charge in the
Mission. There is maximum allocation of 2.5% of project cost for development of parks
with children and elderly friendly features. The Mission covers covering 500 cities that
includes all cities and towns with a population of over one lakh with notified
Municipalities. Total outlay for AMRUT is Rs. 50,000 crores for five years from FY 2015-
16 to FY 2019-20 and the Mission and is being operated as Central Sponsored Scheme.
The project fund is divided among States/UTs in an equitable formula in which 50:50
weightage is being given to the urban population of each State/UT and number of statutory
towns. The Mission is encouraging and supporting the States in conducting reforms that
will improve the financial health of the ULBs, delivery of citizen services, transparency
and cut the cost of services.
The Ministry has circulated model building bylaws and has advised the States to adopt
them, specifically its 14 essential features. The Ministry is also supporting the States in
conduct of credit rating of the Mission cities that will help them raise resources from the
market. The Ministry is also helping them to conduct energy audit of the pumping systems
in the cities in order to improve the energy efficiency.

Reforms under AMRUT

Reforms under AMRUT

Source: GOI AMRUT

Jal Shakti Abhiyan-I of 2019, covered only 1592 water stressed blocks out of 2836 blocks in 256 districts of
the country. A total of almost Rs. 14,000 Cr worth of water conservation related work is
completed/ongoing under the MGNREGS of Dept of Rural Development

19 19
 5.3 Smart City Mission

The concept of Smart City emerged in India with the launch of “Smart City Mission” in
2015 as part of fulfilling the announcement made in Union Budget 2014-15. The Budget
outlined the vision of developing 'one hundred Smart Cities', as satellite towns of larger
cities and by modernizing the existing mid-sized cities.

In a nutshell, smart cities are those cities which harness the potential of technology in
developing city infrastructure and in enhancing the quality of life for city dwellers. No
precise definition for smart city has been developed but a set of core features have been
identified.

• Adequate water supply

• Assured electricity supply
• Sanitation, including solid waste management
• Efficient urban mobility and public transport
• Affordable housing, especially for the poor
• Robust IT connectivity and digitalization
• Good governance, especially e-Governance and citizen participation
• Safety & Security of citizens, particularly women, children and the elderly
• Health and Education

Some of its other features are mixed use of land, transit oriented development (i.e.,
developing commercial and residential plots in the same area to reduce use of vehicles or
to increase the use of public transport), last mile connectivity through para transport (autos,
disabled friendly vehicles etc.) housing solutions for the poor, pedestrian / cyclist friendly
design of streets, preservation of open spaces and ecological balances, green buildings
which reduce energy consumption, mobile and e-governance etc.

Cost and Duration

Cabinet approved the Smart Cities Mission with an outlay of INR 48000 Crore on 29 April
2015. The Mission is to cover 100 cities in five years (FY 2015-16 to FY 2019-20). Each
city would get central assistance of Rs.100 crore per year for five years.

Strategy for making a city smart:

The basic assumption here is that technology can lead to smart outcomes (say provision of
most of the government services online, integrated multi-modal transport, smart meters for
measuring resource (electricity, water, gas etc.) consumption, recycling of waste to energy.

70 cities have developed and operationalized Integrated Command and Control Centers (ICCCs) under
Smart Cities Mission.

20 20
 The Smart City Mission tries to create smart cities in three ways:

• Through city improvement (retrofitting – i.e., correcting through necessary

interventions the deficiencies in an identified area of more than 500 acres),
• City renewal (redevelopment - i.e., reconstruction of already built-up area of more than
50 acres that is not amenable for any interventions)
• City extension (greenfield development of new cities spanning more than 250 acres)
plus a Pan-city initiative in which Smart Solutions are applied covering larger parts of
the city.

Pan-city components could be interventions like intelligent transport solutions (say traffic
management using mobile apps the helps people to divert to less congested roads, allowing
ambulances and other emergency vehicles to control the traffic signals) that benefit all
residents by reducing commuting time. Pan-city is an additional feature to be provided
alongside proposals for retrofitting or redevelopment or green field development.

Selection of 100 Smart Cities:

Smart City aspirants are selected through a ‘City Challenge Competition’. Each state has to
shortlist a certain number of smart city aspirants as per the norms (based on population and
number of statutory towns in the state) and prepare smart city proposals as per their
imagination for further evaluation by Center for grant of funds. This is intended to link
financing with the ability to vision and develop a city. Bhubaneshwar, Pune, Jaipur, Surat,
Kochi, Ahmedabad, Jabalpur, Vishakhapatnam, Solapur, Indore, Coimbatore, Kakinada,
Udaipur, Guwahati, Chennai, Ludhiana, Belagavi and Bhopal are some of the smart cities

Smart City Mission

Source: GOI, Smart City Mission

84.6 lakh tons carbon footprint was reduced through various initiatives under AMRUT, as per The Energy
and Resources Institute (TERI).

21 21
 5.4 Pradhan Mantri Awas Yojana – Urban (PMAY-U)

It is a flagship Mission of Government of India being implemented by Ministry of Housing

and Urban Affairs, was launched on 25th June 2015. The Mission addresses urban housing
shortage among the EWS/LIG and MIG categories including the slum dwellers by
ensuring a pucca house to all eligible urban households by the year 2022, when Nation
completes 75 years of its Independence. PMAY(U) adopts a demand driven approach
wherein the Housing shortage is decided based on demand assessment by States/Union
Territories.
The Mission covers the entire urban area consisting of Statutory Towns, Notified Planning
Areas, Development Authorities, Special Area Development Authorities, Industrial
Development Authorities or any such authority under State legislation which is entrusted
with the functions of urban planning & regulations. All houses under PMAY(U) have basic
amenities like toilet, water supply, electricity and kitchen. The Mission promotes women
empowerment by providing the ownership of houses in name of female member or in joint
name.

Pradhan Mantri Awas Yojana (Urban)

Source: GOI, PMAY

Government investment under PMAY-U created around 689 crore person days of employment translating
into around 246 lakh jobs.

22 22
 5.5 Pradhan Mantri Awas Yojana Gramin (PMAY-G)

Public housing programme in the country started with the rehabilitation of refugees
immediately after independence and since then, it has been a major focus area of the
Government as an instrument if poverty alleviation. To address these gaps in the rural
housing program and in view Government’s commitment to provide “Housing for All” by
2022, the scheme of IAY has been re-structured into Pradhan Mantri Awas Yojana
(Gramin) (PMAY-G) w.e.f 1st April 2016 PMAY-G aims at providing a pucca house, with
basic amenities, to all houseless households and those households living in kutcha and
dilapidated house, by 2022.

Below are the key features of the Yojana:

• The immediate the objective is to cover 1.00 crore household living in kutcha
house/dilapidated house in three years from 2016-17 to 2018- 19.
• The minimum size of the house has been increased to 25 sq.mt (from20sq.mt) with a
hygienic cooking space.
• The unit assistance has been increased from INR 70,000 to INR 1.20 lakh in plain and
from INR 75,000 to INR 1.30 lakh in hilly states, difficult areas and IAP district.
• Once of the most important features of PMAY-G is the selection of beneficiary. To
ensure that assistance is targeted at those who are genuinely deprived and that the
selection is objective and verifiable, PMAY-G instead of selecting a the beneficiary
from among the BPL households selects beneficiary using housing deprivation
parameters in the Socio Economic and Caste Census (SECC), 2011 date which is to be
verified by the Gram Sabhas.
• In PMAY-G, programme implementation and monitoring is to be carried out through
an end to end e-Governance model- Using AwaasSoft and Awaas App.
• The States have to come up with their Annual Action Plan of PMAY-That will include
a plan for convergence in with other Government programme. The mechanism for
convergence in PMAY-G is also to be strengthened through a system to system real-
time transfer of information between the programme that are to converge with PMAY-
G.

The criteria for Automatic Inclusion is as follows:

• Households without shelter

• Destitute / living on alms
• Manual scavengers
• Primitive tribal groups
• Legally released bonded labourer

Under the PMAY-G, Bihar tops the chart for Best Performing state with 2,50,028 houses built in 2019-20
followed by Maharashtra, Rajasthan and Uttar Pradesh. The worst performing state was Sikkim with
only 29 houses built in 2019-20.

23 23
6 Way Forward in the Infrastructure Sector

The infrastructure sector has become the biggest focus area for the Government of India.
India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 to have a sustainable
development of the country. The Government has suggested investment of Rs 5,000,000
crore (US$ 750 billion) for railways infrastructure between2018-2030.
India and Japan have joined hands for infrastructure development in India's Northeast
states and are also setting up an India-Japan Coordination Forum for Development of
Northeast to undertake strategic infrastructure projects for theregion
National Highway Development Project (NHDP) is a 7-phase project amounting to US$
60 billion. The projects aims at widening, upgradation and rehabilitation of 47,054 km of
national highways. In the coming years, NHAI’s increased delegation along with
Bharatmala Pariyojana initiative is expected to enable growth in awarding momentum.
The funds are provided by NHAI for projects under the National Highways Development
Project (NHDP) which include the Golden Quadrilateral, the North-South and East-West
Corridors, and four laning of 12,109 kms under phase III. In June 2020, NHAI became
fully digital with the launch of unique cloud based and Artificial Intelligence powered Big
Data Analytics platform – Data Lake and Project ManagementSoftware
Indian Railway has planned to build 7 high-speed rail corridors to provide faster rail
connectivity across the country at a cost of US$ 17 million. ‘Train 20’ high speed next
generation sleeper class train, which will replace Rajdhani Express, is expected to be rolled
out by 2020. Indian Railway has collaborated with the Government of Japan for the
construction of high speed passenger train corridor between Ahmedabad and Mumbai. The
Government has set a target of commencing the train by 2023
The Government has envisaged making India a global MRO(Maintenance, Repair and
Overhaul) hub, handling nearly 90% of the MRO needs of Indian operators and obtaining
around 20% of the MRO revenue from foreign registeredaircraft.
Government of India has launched NABH-Nirman Scheme, which is aimed at increasing
India’s airports’ capacity. According to various estimates, India will require investments
worth Rs 3 - 4 lakh crore (US$ 62.06 million) to achieve a capacity for having a billion
trips per year.
India is expected to be come the third largest construction market globally by 2022.India
has a requirement of investment worth Rs 50 trillion (US$ 777.73 billion) across
infrastructure by 2022 for a sustainable development in thecountry.

As on 31st March 2019, 26.02 million households have had electricity connections under the Saubhagya
Scheme. Prime Minister Mr. Narendra Modi inaugurated the 750 megawatt (MW) solar project setup at
Rewa, Madhya Pradesh on 10th July,2020

24
24
 Key Highlights of the Union Budget 2021-22

• The government has given a massive push to the infrastructure sector by allocating Rs.
233,083 crore for the transport sector.
• IT and Telecom sector has been allocated INR 53,108 crore.
• Railways received INR 1,10,055 crore, of which INR 1,07,100 crore is for capital
expenditure.
• INR 1,18,101 crore has been allocated towards road transport and highway.

In Budget 2021, the government announced the following interventions under Pradhan
Mantri Aatmanirbhar Swasth Bharat Yojana (PMANSY):

• An outlay of INR 64,180 crore over 6 years to strengthen the existing ‘National Health
Mission’ by developing capacities of primary, secondary & tertiary care and healthcare
systems & institutions to detect and cure new and emerging diseases. It will strengthen
17,000 rural and 11,000 urban health and wellness centers.
• Setting up integrated public health labs in districts & 3,382 public health units in 11
states.
• Establishing critical care hospital blocks in 602 districts and 12 central institutions.
• Strengthening the NCDC (National Centre for Disease Control) to have five regional
branches and 20 metropolitan health surveillance units.
• Expanding integrated health information portal to all states/UTs.
• Rolling out the pneumococcal vaccine, a ‘Made in India’ product, across the country.
• INR 35,000 crore has been allocated for COVID-19 vaccines in FY22. The
government announced INR 18,998 crore for metro projects.
• Mega Investment Textiles Parks (MITRA) scheme was launched to establish world-
class infrastructure in the textile sector and establish seven textile parks over three
years.
• The government announced Rs. 305,984 crore (US$ 42 billion) over the next five
years for a revamped, reforms-based and result-linked new power distribution sector
scheme.

Impact of COVID 19 on Infrastructure sector:

The escalation of COVID-19 pandemic has impacted the Indian economy severely. One of
the key sectors affected is infrastructure, given its importance in supporting the overall
growth and development of India’s economy, it has been adversely affected due to the
pandemic and the lockdown. The S&P BSE India Infrastructure Index has lost nearly 35%
value between January end and March end.

A nationwide lockdown for more than two months and continuing restrictions to contain the Covid-19
pandemic are the newest threat to the growth of infrastructure sector. The casualties are expected to be
flagship projects such as the 3,300 km freight rail network to connect India’s eastern and western regions.

25 25
 Demand Risk
• As per the directions of the Ministry of Road Transport & Highways/National Highway
Authority of India (NHAI), operations at all toll plaza of the Project SPVs of the
Company have been closed. Also, no toll collection is allowed till April 15, 2020.
• For power assets, since almost 50% of the demand is from industrial / commercial,
sustained lockdown will have adverse impact on revenues, even post lockdown, ramp-
up will take some time.
Supply Side Risk
• The impact of recent labor migrations due to COVID 19 will amplify the stress on the
infrastructure sector. The availability of human capital is critical for both operational
assets and under construction assets and there is no precedence to estimate the
economic impact of human crisis.
Liquidity Risk
• Liquidity will be key to prevent any payment defaults or debt restructurings. Given the
assets are significantly leveraged (operational and under-construction), the optimality of
capital structures will be reassessed due to the sudden and significant impact on the
revenue side.
Counter-party Credit Risk
• As Indian infrastructure assets are attracting a lot of foreign funds, stress on the ratings
and possible downgrades could test the ability of the domestic institutions to attract new
investments in the short and mediumterm.

S&P BSE India Infrastructure Index

Source: Duff & Phelps

As of now, 23% of total power generating capacity is through renewable energy sources and 63 % is
through thermal energy. The Indian government has aligned itself to be self-sufficient in fuel generation
and that too through non-fossil-based fuels.

26 26
7 Introduction to Logistics Sector in India

7.1 Logistics Sector in India

Logistics is defined as the process of planning, implementing, and controlling the efficient,
cost effective flow and storage of raw materials, in-process inventory, finished goods and
related information from point of origin to point of consumption so as to meet customer
requirements. The Indian logistics industry provides employment to more than 22 million
people. It has grown at a compound annual growth rate (CAGR) of 7.8% during the last five
years. The Indian logistics industry is the backbone of our economy. Our world logistics
index rankings have come a long way since the beginning of its slow ascent to success. In
2014, the Indian logistics industry ranked 54th globally in the Logistics Performance Index.
Moving to 2018, the ranking jumped to 35th and showed a massive improvement in the
logistics system.
The entrance of several MNCs into the FMCG sector of the country also creates new
avenues of opportunity for the Indian logistics industry to grow. These new and upcoming
sectors’ progress has a direct impact on the growth of the Indian logistics industry’s
inventory management and effective warehousing solutions for the retailindustry.
Following are the key drivers behind the growth of logisticssector:
Infrastructure Development: The Indian Government has introduced key infrastructural
development projects to increase access to the untapped rural markets in the country. These
projects will focus on bringing more efficiency to the supply chain and improve connectivity
issues faced due to the geographical vastness of the country and the different terrains
present.
Boost in Policies and Regulations: Revolutionary policies and reforms rolled out by the
Indian government such as the Goods and Services Tax (GST), granting of the infra status,
and relaxing the FDI policies will play a major role in 2020 with the boost of the Indian
logistics industry received. The system improved the model of freight and cargo movement
that the logistics companies used for transportation from manufacturing units to the
warehouses, wholesale market, retail market and the points of sale.
The Advantage of Adopting the Latest Technology: In the logistics industry it has spelled
loads of progress in the operations and various systems. Artificial intelligence, machine
learning and the internet of things are meant to move the foundations of traditional and old-
school logistics operations in the country

Logistics Performance Index (LPI) is issued by World Bank and it is given on the basis of six factors
namely: Customs, Infrastructure, International Shipments, LogisticsCompetency, Tracking & Tracing and
Timeliness

27
27
 Sector Categories
The transportation sector, with 60-65% share, dominates India’s logistics spends given the
vast landscape and reliance on expensive road transportation. Of the balance, total inventory
and carrying cost spent, carrying cost makes up 80-90% with the rest related to
warehousing and storage. Compared to globally, share of transportation is higher in India
because of the dominance of expensive road transport.
Road and Rail Mix
In the transportation sector, road dominates. Road’s share in the total transportation modal
mix at 75% (volume based) is much higher than in other countries (US-37%, China-22%).
Rail transport is primarily used for transport of bulk commodities (coal contributes ~40% of
total freight earnings). While Indian Railways has monopoly in rail transportation, private
players are permitted only in container transportation. The road full liner terms (FLT)
segment is dominated by unorganised players predominantly due to the nature of the
business, which involves transport of a full load. As a result, many truck drivers have
purchased their own trucks/smaller fleets. However, in contrast, in the surface express
segment having significant network is mandatory. As a result, this space is dominated by
organised players, with the top 6 accounting for nearly 50% of the market. The vision of the
proposed policy is to drive economic growth and business competitiveness of the country
through an integrated, seamless, efficient, reliable, green, sustainable and cost effective
logistics network leveraging best in class technology, processes and skilled manpower.

National Logistics Policy

Source: vajiram.com

During the last decade, road freight has grown at a compounded growth rate of 11.9% compared to 1.4%
on rail. Share of road in freight likely to stabilize around 85%.

28 28
 Synchronisation of Logistics and Warehousing and itsimportance:
Warehousing is a key component of logistics management and how businesses manage the
transportation and storage of their inventories. Warehousing and logistics must be aligned
within a firm to have the most efficient effect on overall manufacturing production as well
as outbound logistics activities.
Of the total inventory related cost, carrying cost constitutes nearly 90%. In the storage
/warehousing segment, industrial warehousing is the largest sub-segment in value and space
terms. However, cold chain warehousing is expected to be the fastest growing segment.
According to 2018 CRISIL report, cold-chain industry will log a compound annual growth
rate of 13-15% in the five fiscals through 2022, compared with 11-13% in the previous five.
Synchronization can be the alignment of logistics functions such as transportation window
times (pickups and deliveries) in regards to warehousing staffing constraints. This
scheduling synchronization allows for the optimal number of employees and machinery to
load and unload shipments at the scheduled times, reducing waste, idle time(s), and re-
work.
Other forms of synchronization between warehousing and logistics include buying patterns
for inbound parts to alleviate stresses on dock constraints as well as facility storage
constraints (racking etc.). Reducing the inbound volume of shipments to match outbound
volume will help create a level flow of parts throughout the warehouse as well as other parts
of the supply chain.

Process Flow of Inbound and Outbound Logistics

Source: slideeam.com

Warehousing is safe storage of goods, inventory, information, etc. within a specified area or building.
Logistics includes function of: transportation, warehousing, of the same goods, inventory, information,
etc. to a manufacturing line or back to the firm from customer

29 29
 Logistics and Warehousing

• Logistics and warehousing play an important role in the industrial advancement of the
country. They are a fundamental part of business infrastructure and one of the key
enablers in the global supply chain.
• In 2020, the logistics sector in India is estimated at USD 215 billion.
• According to a JLL report, warehousing demand is expected to grow 160% to reach 35
million sq. ft. in 2021.
• Of the total PE investments of USD 3,241 million in real estate in Q1 FY21, the office
segment attracted 71% share, followed by retail at 15% and residential and
warehousing with 7% each.
• Investment in the logistics sector is expected to reach USD 500 billion annually by
2025. Warehousing in India is expected to get investment of INR 50,000 crore by the
end of 2020.
• In July 2020, Amazon India announced its plan to establish 10 new fulfilment centers
across Delhi, Mumbai, Bangalore, Patna, Lucknow, Kolkata, Hyderabad, Chennai,
Ludhiana and Ahmedabad, to cater to the surge in demand for online shopping for the
upcoming festive season.
• In October 2020, Flipkart acquired a 140-acre land at INR 432 crore (US$ 58.87
million) to establish their largest fulfilling center in Asia, in Manesar, Gurgaon, in a
bid to scale their fulfilment infrastructure to cater to increased demand post COVID-
19.
• In April 2021, Flipkart announced a commercial alliance with Adani Group to improve
the company's logistics & data center capabilities and create around 2,500 direct jobs

Logistics Market Size (USD billion)

Source: IBEF.org

According to a February 2021 report produced by JLL India, the overall warehousing space stands
at 238 million square feet at the end of 2020 compared to 211 million square feet in the previous year. So
a net supply is 27 million square feet.

30 30
 7.2 Major players in Logistics sector:
A major strategy currently being practiced by global logistics players in doing business is
by providing integrated logistics solutions and by offering value added services to
customers. The aim is to build a long-term relationship with the customers by providing
one-stop solution. This improves the supply chain efficiency and also enables the OEMs
to concentrate on their core activities. Some key players in the industry providing high-
tech infrastructure, excellent IT and communication system are:

SERVICES SERVICE PROVIDER

GATI
TCI
Transporters
Dynamic Logistics
Patel Roadways
DHL
FedEx
Express Cargo and Courier Operators
Elbee
Safe Express
AFL
Alpha Cargo Express Pvt Ltd
Freight Forwarders
Air & Sea cargo systems
Container carriers InternationalPvt

CONCOR
Container Companies Maersk
Indian Container Leasing Company Ltd

Maersk
P&O Nedlloyd
Shipping Agents
APL
Inter world cargo care Pvt ltd
Central warehousingcorporation
Associated container terminals
Warehouse Providers
Ltd(ACTL)
Dynamic logistics
Geologistics
Excel
3PLs
Bax Global
Panalpina

LEAP is the brainchild of Sunu Mathew, an IIM Calcutta alumni and ex-Director, FMCG at CHEP. In
2013, when the Indian logistics was considered to be a largely fragmented industry with only a few
major players, Sunu realised the need for a pallet and container rental provider in India

31 31
 7.3 Logistics Models
Introduction
Known as a massive chain network, logistics is a detailed organization responsible for
carrying out various delivery and shipment related operations. Whenever you buy a
product from an online store these logistics are the ones, that takes care of your shipment
and makes sure you get the right product in your hand. The rise of e- commerce has made
a significant contribution in a world economy and so did these logistics.
Businesses need to determine the best way to distribute their products. Thanks to
innovations of complex supply chains around the world, the process of shipping and
distributing items has never been easier.
Following are the most commonly adopted LogisticsMode
1PL: A first-party logistics provider (1PL) is a firm or an individual that needs to have
cargo, freight, goods, produce or merchandise transported from a point A to a point B. A
1PL can be a manufacturer, trader, importer/exporter, wholesaler, retailer or distributor in
the international commerce field. Anyone having goods moved from their place of origin
to their new place is considered to be first-party logistics provider.
2PL: A second-party logistics provider (2PL) is an asset-based carrier, which actually
owns the means of transportation. Typical 2PLs would be shipping lines which own, lease
or charter their ships; airlines which own, lease or charter their planes and truck companies
which own or lease their trucks.
3PL: A third-party logistics provider (3PL) provides outsourced or 'third party' logistics
services to companies for part or sometimes all their supply chain management function.
Additional services can be crating, boxing and packaging to add value to the product. E.g.
DHL, Excel etc.
4PL: A fourth-party logistics provider (4PL) is an independent, singularly accountable,
non-asset based integrator who will assemble the resources, capabilities and technology of
its own organization and other organizations, including 3PLs, to design, build and run
comprehensive supply chain solutions for clients.
5PL: A fifth party logistics provider (5PL) will aggregate the demands of the 3PL and
others into bulk volume for negotiating more favorable rates with companies. Non asset
based, it will work seamlessly across all disciplines. The central ethos of 5PL is its
commitment to collaboration and in order to obtain a higher degree of resource utilization
to achieve savings and open up opportunities to secure the best possible solution at
minimum cost/carbon etc.

Regulatory reforms such as GST are further incentivizing this shift. As a result, we see India’s 3PL
market nearly tripling to USD17 billion by FY25 with 17-18% annualgrowth

32 32
 8 PESTLE Analysis of Logistics Sector

8.1 Overview

The sector, as a whole, is not very organized, especially in the big cities, where there are
numerous unorganized small truck owners and service providers providing stiff competition
at razor thin margins. There exist both within-the-industry or internal and external factors
that firms will have to engage with to promote the industry as well as individualbusinesses.

• Make in India initiative has led to increase in public investments in logistics sector. The
Minimum Wage code Bill,2017 makes it illegal to pay workers less than the minimum
wagerequirement
P • GST: Tax reform dissolved the state borders within India

• Skilled labor in logistics is a major issuein India.

• High consumption demand highlights the need for distribution centers and established
transportationchannels
E • DHL & Kerry Logistics have invested heavily in India

• Land acquisition continues to be a challenge

• Displacing people from their agrarian jobs without any promise of employment

S • Red tape is prevalent in social circles in rural areas

• Automation driven technology for inventory and warehouse management

• Data analytics for routing, space optimization and monitoring stock data
T
• Compliance of legal documentation and contractual obligations
• Dealing with issues of goods which are restricted in different countries
L • Mergers and Acquisitions regulations.

• Transportation via heavy load vehicles affects air quality, creates noise and leads to
global warmingeffects
• CO2 emissions during transportation, warehousing and material handling(concept of
E circular economy is becoming the new trend)

Source: IBEF.org

PESTEL analysis examines a target market’s political, economic, social, technological, environmental, and
legal dimensions in term of both its current state and possible trend

33
33
 8.2 Challenges in the Logistics Sector
With globalization, logistics is expected to play an increasing role in driving the Indian
economy. Multiple challenges of infrastructural deficiency, lack of integration amongst
stakeholders, lack of skilled manpower and slow adoption of technology continue to weigh
it down.
Infrastructure
• It has cramped growth of the logistics sector, which is reflected in inadequate and low-
quality modal and terminal transport infrastructure, suboptimal modal mix, inefficient
and ill-designed storage facilities for cargo and containers, inefficient operational and
maintenance protocols, and poor adoption/adaptation of technology.
• Due to lack of proper planning, there is overuse of high-cost modes like road at
expense of cost-effective and sustainable modes like inland waterways and
Skill Development
• India has a demographic advantage but the availability of appropriately skilled
manpower remains a challenge. It is the result of inadequate training and proper
leadership and support. The sector needs to specifically build a pool of personnel
comprising truck drivers, seafarers, warehousing managers, quality inspection
supervisors, among others.
Information Technology
• Slow adoption of new technologies has been another big constraint. Awareness about
the economic benefits of using digital technology is low and collaboration among
stakeholders far from satisfactory. As a result, the logistics ecosystem is fraught with
operational inefficiencies and poor asset utilization.
• Technological infrastructure has remained inadequate, marked by slow network speeds,
subpar performance, and unreliable hardware and software, all leading to high costs
and underperformance.
Regulatory Hurdles
• The introduction of GST could change the contours of the logistics sector completely
but such disruptive reform requires proper implementation. Multiple regulatory
agencies, if not coordinated and brought under a single umbrella, could slow down the
creation and operation of logistics infrastructure.
• Obstacles in land acquisition and consolidation, and change in land use still continue to
be major impediments. Lack of transparency in compliances further adds to the woes of
the sector.

There are nearly 5 million truck drivers moving freight across the India, which means that one out of
every 15 people working in the India is employed by the trucking industry.

34 34
 8.3 New Developments in the field of Logistics
The logistics sector is undergoing a quiet revolution. The key benefits are reduced costs,
quick arrivals and complete tracking of goods. The GST would also drive operating
efficiencies as the time spent on border checks could now be used to move goods further.
The grant of infrastructure status will allow the logistics companies get access to more
economical loans under favorable terms. It will attract investments from debt and pension
funds into recognized projects. It will simplify the process of approval for construction of
multi modal logistics parks facilities.
The introduction of E-Way bill (electronic documentation aimed to track goods movement
and prevent tax evasion under GST) would increase transparency as well as encourage
further formalization of the sector.
A new Logistics Division in the Department of Commerce has been established to
coordinate integrated development of the sector. Government plans to bring down the
logistics cost from current 13-14% of GDP to around 10% of GDP. The new
developments are likely to reduce the cost of logistics inIndia
Best practices to help business develop a logistics contingency plan that will keep business
afloat during unprecedented events like COVID 19:
• Be flexible: Contingency planning is designed to be an ongoing and iterative process,
one that is adaptable to changes over time. Plan for what you can, stay informed about
factors that might change your plan, and build flexibility into processes so that firms
can plan accordingly.
• Focus on supply chain visibility: Despite being listed as a top priority year after year,
as recently as 2017, only 6% of companies reported that they have full visibility into
their supply chain. Supply chain visibility solutions are an invaluable resource for
mapping and monitoring global supply chain so that firms are aware of potential
disruptionswell before they happen and can adjust your plan as needed.
• Subscribe to Murphy’s Law: According to Murphy’s Law, “Anything that can go
wrong will go wrong.” When it comes to supply chain disruption, always expect - and
plan for - the worst. Figure out well in advance how to respond in different disruption
scenarios, develop a backup plan for each step of your supply chain in case any should
fall through, and clearly communicate to your employees their roles and
responsibilities.
• Develop a strategy for emergency shipments: As we’ve seen in the case of COVID-
19, emergency shipments become a top priority in disruption scenarios. Carefully
consider transportation needs prior to evaluating carriers in order to ensure that they can
meet your mission-critical requirements and maintain the flow of goods, even in an
emergency situation.

The Indian UAV Drones Market is expected to reach USD 1,810 million by FY 2026 growing at a CAGR of
14.61%, owing to the rapid technological advancements and growing need for advanced security systems.

35 35
9 Way Forward in the Logistics Sector

Overview
In the current era of digital transformation, several technological disruptions have come
together to create powerful tools that are reshaping industries across the globe. Digital
transformation has the potential to have far-reaching payoffs for a leaner and smarter
logistics by ensuring smoother interface among logistics stakeholders for seamless delivery.
It can benefit the entire logistics value chain, including warehousing operations, freight
transportation, and last-mile delivery.
• Internet of Things (IoT): IoT is the networked connection of physical objects that
can help capture information for generating new insights and adding value to
business. It can enable the logistics ecosystem in India in the following ways:
• Predictive diagnosis to monitor the status of assets in real time throughout the value
chain. In several countries, advanced sensors are being used to monitor and detect
risks pertaining to breakdowns, helping avoid process delays and fatalaccidents.
• Providing visibility for in-transit carriers: Global Positioning System (GPS) and
Radio-frequency Identification (RFID) systems, is being used to provide logistics
carriers with real-time information on key location stats. This has helped make the
logistics ecosystem more responsive
• Automation technology in the logistics sector allows the use of control systems for
operating machinery, processes, vehicles, vessels, and aircraft through the use of
artificial intelligence. It can help automate business processes to reduce/eliminate
manual interventions for freight handling, to improve quality, speed up processes
and subsequently bring down logistics costs.

IoT in Logistics

Source: LinkedIn

India does not lag far behind in adopting digital transformation initiatives in the sector. the market has
started experimenting with using anti-collision devices, which are being used to monitor the movement of
new age trucks and alert the driver in case of a possibility of an accident/breakdown.

36
36
 • Cloud Computing: Cloud technology refers to the universal, and convenient access to a
shared pool of networks, storage, servers and applications that can be accessed through
the web. This technology can help the Indian logistics sectorby:
• Optimizing asset utilization: As logistics in the country aims towards becoming
leaner, optimizing asset utilization is important to enhance operational efficiency. The
Indian road transportation sector remains
• Highly fragmented and often the vehicle fleet either lies idle or returns empty after
transporting the freight. Sharing information on cloud-based platforms in real time
can help service providers coordinate and collaborate for the pickup and delivery of
freight. This will not only reduce the idle time of their fleet but also make the delivery
ecosystem more efficient.
• Enabling storage and easy access of data: With cloud technology that enables the easy
storage of vast amounts of data without the need for physical servers or hard drives,
logistics service providers can easily access information from anywhere.
• Big Data Analytics , another element of the digital revolution, enables number crunching
and ‘sense-making’ of complex data sets that are captured through ‘smart’ devices and
stored across servers and networks. It can be employed by various logistics playersfor:
• Driving future strategy: Analytics can be applied to the entire logistics value chain to
identify improvement opportunities and achieve operational efficiencies in the country’s
logistics framework. Big Data can be used to manage and implement complex statistical
analysis, data mining, and retrieval processes for big data that help identify key insights
and trends. This analysis can then be used to develop algorithms and estimate the
remaining useful life of assets, identify areas of operational inefficiencies, eliminate
redundant costs and drive future strategy.

Benefits of Analytics & Big Data in Retail

Source: bi4all.pt

The logistics sector is likely to adopt increased automation of processes through the launch of robotics and
artificial intelligence in transportation and warehouse management, thereby reducing reliance on human
intervention.

37 37
 Impact of COVID19
The impact of COVID-19 on the logistics sector was quite clearly visible as soon as the
lockdown was announced on 25th March, 2020. The movement came to a near standstill
with the exception being the transportation of essential goods. The months preceding the
pandemic were fairly stable, except for a minor slump in the volume of shipments during the
2nd half of 2019. This was largely due to the economic slowdown that India was
experiencing on the backdrop of weak global business sentiment, the China-US trade
tensions, and demonetisation.
COVID-19 will accelerate trends
• While the majority of the trucking industry works offline even today, there are 3 broad
structural shifts taking place within theindustry:
• All stakeholders are looking for a larger pool of carriers and shippers today due to the
disruption in their already fragmented ecosystem. This is pushing people to adopt digital
discovery platforms to look for relevant demand and supply channels. The demand-
supply patterns have reset the pricing benchmarks, people prefer to have data-backed
insights to price their freight.
• The documentation and payments in this industry are heavily dependent on manual
intervention – to the extent of needing hard copy documents to receive payments. We are
seeing many of the shippers moving to e-documentation and digital payment methods.
This has accentuated even more now, because of social distancing norms related to
avoiding human contact.
• Apart from these, there will be various efforts to democratise goods movement for
farmers, small-time shopkeepers and distributors in the country, this will enable them to
fetch a better price for theirgoods.

Covid19 Trends on the Logistics Sector

Source: smallcase.com

The strongest impact of COVID-19 was seen on the 2nd or 3rd day of the lockdown, when movement of
trucks fell by 90% – 95%. The little movement witnessed was of essential goods which had not come under
the purview of restrictions imposed due to the lockdown.

38 38
Research and Scholastic Development Team (R.S.D.T)

S - Team
Aishwarya Dhamangaonkar (Operations)
Akansh Arora (Finance)
G.S.V Ramana (Finance)
Samiksha Gamare (Marketing)
Sunaina B N (HR)
Tushar Upadhyay (Marketing)
Vamshi Krishna Salem (Marketing)
Yamini Mathur (Operations)

I - Team
Bhavini Priyamvada (Marketing)
Keerthi Krishna A. S. (Operations)
Komal Agrawal (Marketing)
Kshitiz Jaiswal (Marketing)
Phanindra Sai Siddamsetty (HR)
Sheetal Sable (Operations)
Shubhada Vyawhare (Marketing)
Vallabh Agarwal (Operations)
Yash Vardhan Chaudhary (Marketing)

39
 SYMBIOSIS INSTITUTE OF BUSINESS MANAGEMENT
Constituent of Symbiosis International University
Accredited by NAAC by ‘A’Grade

Gram: Lavale, Tal: Mulshi, Dist: Pune – 412115

Email: [email protected], Tel: 020 39116068
Website: www.sibm.edu
Source: smallcase.com

editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover
many web sites still in their infancy. Various versions have evolved over the years, sometimes by
accident, sometimes on purpose (injected humour and the like).

40