Gati Shakti would help reduce supply chain and logistics cost: CII

The Indian industry hopes that Gati Shakti, launched by Prime Minister Narendra Modi on Wednesday, will lead to better implementation of infrastructure projects and thus lead to a reduction in logistical cost.

In an interview to CNBC-TV18's Shereen Bhan, TV Narendran, President of CII, said logistics cost in India is 13-14 per cent whereas in the developed world it is much lower at 6-8 per cent.

Prime Minister Narendra Modi on Wednesday launched a Rs 100-lakh crore national master plan for multi-modal connectivity that aims to develop infrastructure to reduce logistic costs and boost the economy. PM Gati Shakti targets to cut logistic costs, increase cargo handling capacity and reduce the turnaround time, Modi said at a function to launch the plan.

The plan aims to lend more power and speed to projects by connecting all concerned departments on one platform, he said, adding the infrastructure schemes of various ministries and state governments will be designed and executed with a common vision. Modi said taxpayers' money in the past was 'insulted' through a lethargic approach to development work, with departments working in silos and there was no coordination on projects.

Development, he said, is not possible without quality infrastructure and the government has now resolved to develop it in a holistic manner. Gati Shakti joins different departments for the coordinated development of projects from road to railways, aviation to agriculture, the Prime Minister said.

The CII President said with Gati Shakti the government's intent is right but the action needs to get it right. "The cost of logistics in our country is 13-14 per cent whereas in the developed world it is much lower than that at 6-8 per cent. When you look at competitiveness, Indian industry can take care of costs which they control but there are a lot of costs outside the control of industry and that is where government needs to step in and create infrastructure. So, all the infrastructure projects that have been announced over the last couple of years and with this kind of a monitoring system, we hope will lead to the more efficient delivery of these projects and hence a reduction in logistics cost," Narendran said.

"The money that we are planning to spend on infrastructure is multiple times what we have done in the past. So, it is in everybody's interest and the Prime Minister himself mentioned that we have to make sure that taxpayers' money is not wasted. So, the intent is right but the action needs to get it right. There is a lot of use of technology, a lot of use of digital to track the different projects and hopefully there will be more visibility on what is happening in different parts of the country. There is a promise of better coordination between the different ministries, the Centre and the State. So, there is an attempt to do things differently and hopefully, they have taken the learnings from the past," Narendran added.

Sanjiv Bajaj, President-Designate of CII, said Gati Shakti would help reduce supply chain and logistics cost as States can now plan their infrastructure projects in a better way.

"Between the State and the Centre, there are a number of actions that happen on the infrastructure side led by the Centre. If the State now knows in advance on one common platform about it, then they can help and plan also on a complimentary basis. The multiple layers of information that we understand have been made available in Gati Shakti should actually increase efficiency in the entire process of building infrastructure and reduce supply chain and logistical cost for industry and it can be a big saving over the coming years."