DMPQ: Recently infrastructure status was given to the logistics sector? Analyse the advantages and major hurdles. (economy)

With growing sectors like automotive components, pharmaceuticals, cement, textiles, FMCG and e-commerce, there was the need of the healthy and efficient logistics sector. India rank 35 out of 160 in the logistics performance index. ( This is quite low). Hence GOI recently granted infrastructure status to the logistics.

 

Major benefits attached by granting infra. Status  with the logistics sector are as follows:

  • Availability of easy credits to the companies operating within these segments. Now long-term credit from banks and other Financial institutes can give credit to these companies.
  • It will also help to attract foreign investment.
  • More funds and capital will make sector more efficient and thus help to reduce per unit cost incurred in logistics. This will have cascading effect on improving competitiveness.
  • It will also help to prevent the damages of Perishable items in the agriculture sector by having a healthy cold chain supply chain.

 

Major Impediments:

  • Road Infra in bad shape.
  • Banks lack of lending capacity. Facing NPA issues.
  • Flight of capital due to Quantitative easing.