Revolutionising logistics: How Gati Shakti is transforming supply chains

Imagine a spice farmer in Wayanad, Kerala, sending his produce to Europe.

His logistics partner is in a position to deploy trucks on demand, almost immediately, because of the predictability of turnaround times afforded by reliable highways.

The trucks need to travel a few hundred kilometres to reach a state-of-the art multimodal cargo terminal, where the spices are quickly on-loaded to a container freight train waiting just in time for the cargo.

With the capacity of the rail network enhanced, freight charges have reduced and the time slot in which the container will be delivered to the port can now be guaranteed.

 

By the time the container reaches the port of embarkation, relevant paperwork is already done.

Soon the spices set sail towards Europe, 48 hours after the journey began from an obscure farm in Wayanad.

This may sound like a dream, but many farmers across India are living it every day, thanks in large part to the PM Gati Shakti National Master Plan (NMP) for multimodal connectivity, which envisages taking India from silos to seamless connectivity.

The original intention

Launched in October 2021, PM Gati Shakti was conceptualised as a digital platform to ensure integrated planning and coordinated implementation of infrastructure projects across India.

The intent was to provide optimum logistics efficiencies in terms of lower integrated logistics costs and greater value to stakeholders.

Traditionally, government departments have been disjointed in their approach to multimodal transport and infrastructure development, with rail schemes heading out on their own track separate from winding road plans that have not factored the demands of ports.

Gati Shakti strives to ensure ministries and departments work in sync, providing a 360-degree enabling environment for industrial zones. It promises visibility, predictability and reliability in the logistics supply chain, without any transit delays, electricity and data issues, waiting for rakes and paperwork, and with modern cargo-handling facilities.

The spice producer and thousands like him also have the option of reaching the domestic markets quickly through a chain of cold storages, warehouses, inland waterway services and air cargo terminals.

What is more, the vision includes power, gas and telecom. And parts of it have already been realised.

Structured as the much-discussed three tiers, PM Gati Shakti offers ground-level benefits in the form of: a) improved project execution visibility; b) control on cost overruns; c) better project appraisal and monitoring; and d) boost to connectivity and multimodality to curtail logistics cost.

All this is possible because of a futuristic and integrated infrastructure backbone, relevant to specific industrial requirements, which is operated and maintained efficiently.

How it has fared so far

Via PM Gati Shakti, 48 GCTs (Gati Shakti Cargo Terminals) have been commissioned to date, with the private sector also pitching in.

Now, 14 social sector ministries have been added to the platform by the Ministry of Commerce, enhancing its coverage to socio-economic development. Furthermore, integration of 39 individual infrastructure and user economic ministry portals, and that of 36 states and Union Territories, has been completed. The NMP currently has 1,548 integrated data layers from the Centre and states.

The integration is not merely of portals. Technology, including spatial planning tools with Indian Space Research Organisation (Isro) imagery developed by Bhaskaracharya National Institute of Space Applications and Geoinformatics (BISAG-N), is being leveraged to provide holistic data-driven visibility and efficiency in project execution.

The government believes a similar approach can be used at state and district levels. The Network Planning Group (NPG), a part of PM Gati Shakti, has multiple layers of geospatial data from across the country. It has facilitated 85 large infrastructure projects worth nearly Rs 5.4 trillion so far. The government is now working on a mechanism to make this data available to industries and potential investors.

Traction is building, as a result. With the success of GCTs, government departments are now reaching out to PM Gati Shakti with more proposals, and private sector participants are awaiting more opportunities.

Not old wine in new bottle

PM Gati Shakti may remind us of the erstwhile Planning Commission, which was centralised in nature.

The NMP, in contrast, gets its hands dirty by evaluating projects from the lens of integrated development, and benefit to industries and planning to ensure timely and synchronised implementation on the ground. It leverages data and technology for faster preparation of project reports, and their evaluation.

Another underlying critical success factor is collaboration, as well as the urgency and mission mode of working, the energy spreading rapidly. The magical concoction of GIS-based technology, institutional reforms, and private sector involvement makes a difference on the ground.

Digging deeper for success

Infrastructure projects are cost- and time-intensive. Funding, land acquisition, approvals and construction make the projects complex and risky. Hence, mere coordinated planning, faster project reports, and enabling policy framework are insufficient for achieving success.

Projects also require support from financial institutions/banks, unobstructed approval processes, robust and performance-driven contracts, and assistance in land acquisition.

The government is taking initiatives to address these needs progressively. This includes changes in the foreign direct investment policy, ease of doing business, fiscal incentives, and the Performance-Linked Incentive scheme.

Moreover, institutional entities such as the Project Monitoring Group and Invest India are diving deep into progress and implementation.

Structures and instruments such as infrastructure investment trusts are promoted to bring institutional investors under the umbrella, freeing up capital for private developers.

Since reliance on public-private partnerships is substantial, it is necessary to ensure that both the public and private sectors gain a positive experience from this partnership. Fault-finding should not be the objective; instead, learnings from the past must be incorporated in the bidding process, concession agreements, and contract management.

The road ahead

The key is to keep the momentum going. PM Gati Shakti is enhancing the competitiveness of Indian industries. With further improvements, logistics costs will reduce from their current 12 per cent-plus of gross domestic product to lower levels.

The NMP has also opened the doors for the integration of more initiatives in the larger plan — bringing in SagarMala, Bharatmala, and Parvatmala, and even the likes of Logistics Data Bank and Unified Logistics Interface Platform.

The possibilities are endless. There is no going back to the old ways.

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The writer is Senior Practice Leader - Consulting, CRISIL Market Intelligence and Analytics