The Asian Development Bank (ADB) has approved a $350 million policy-based loan to support the Government of India’s wide-ranging reforms to strengthen and modernize the country’s logistics sector and achieve increased economic competitiveness.
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The loan will finance the second subprogram of the Strengthening Multimodal and Integrated Logistics Ecosystem Program, which supports the government’s efforts to create a comprehensive policy, planning, and institutional framework at the federal, state, and city levels. This builds on reforms introduced during the first subprogram by institutionalizing policies to strengthen interagency coordination as well as standardizing processes to encourage private sector investment and improve operational efficiency.
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The development of India’s logistics sector is pivotal in enhancing the competitiveness of its manufacturing sector. Through strategic policy reforms, infrastructural improvements, and digital integration, the government’s ongoing reforms are set to transform the logistics landscape. This transformation will not only reduce costs and improve efficiency but also create employment opportunities and promote gender inclusion—driving sustainable economic growth.
The Government of India has launched several strategic policies to address logistics sector constraints, including the Prime Minister Gati Shakti-National Master Plan (PMGS-NMP) and the National Logistics Policy (NLP). These initiatives aim to improve infrastructure, streamline processes, and promote digitization. ADB’s program supported India’s reform efforts, which have improved India’s ranking in the World Bank’s Logistics Performance Index and reduced logistics costs significantly. Key actions include establishing institutional arrangements for logistics planning at the state and city levels, implementing a grain storage plan, and adopting green transition guidelines for inland waterways.
“The development of the logistics sector profoundly impacts the manufacturing sector’s competitiveness. Improved logistics efficiency enhances supply chain resilience, reduces transaction costs, and boosts export competitiveness,” said ADB Senior Public Management Economist Sameer Khatiwada. “The integration of digital technologies and standardized processes facilitates smoother movement of goods, which is crucial for manufacturing growth.”
From 2000 to 2022, India’s goods exports increased from $48.5 billion to $467.5 billion, while industrial exports grew from $39.6 billion to $317.4 billion. The government aims to reach $2 trillion in exports of goods and services by 2030. The program is helping India achieve this target by enhancing productivity and the transfer of goods, reducing logistics costs, and reducing greenhouse gas emissions.
The logistics sector reforms are also expected to create substantial employment opportunities, both in urban and rural areas. The increased demand for skilled logistics workers, driven by private sector investments and process efficiency, will contribute to job creation. Additionally, the digitization and automation of logistics processes will generate new types of employment, aligning with the evolving needs of the sector.
About ADB
The Asian Development Bank (ADB) is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. ADB assists its members and partners by providing loans, technical assistance, grants, and equity investments to promote social and economic development. Established in 1966, it is owned by 69 members—49 from the region.
