Transportation & logistics cost major concern for Indian economy, what impact can electric vehicles lay upon reducing the cost of logistics and the extent to which it can benefit the economy of India.

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As India grow up as a central market for the renewable’s the focus upon electric vehicles are bound to gain, as it shall be serving a dual purpose for the Government. The first one being reduction in the cost of transportation and logistics as a share of the overall economy and second being the benefits rendered from the decarbonisation of the fleet involved in the transport with replacement by electric vehicles. Interestingly, the share of GDP for GoI which goes into the transport and logistics market is close to 14.4% which is aimed to be reduced in single digits gradually which may prove a boon for the Government to look into more investments in infrastructure development and providing basic amenities to the common man of the country. Electric vehicles, hyperloop & personal rapid transport shall prove to be a game changer for India considering the volume of freight movements and the geographical spread of the country. In this regard the commerce ministry of the country plans to evaluate the suitability of these new technologies for freight transport to bring down the costs to less than 10% of the gross domestic product (GDP) by 2022. India’s logistics and transportation costs are as high as 14.4% of GDP compared with China’s 8%, and if found compatible enough these new technologies shall be adapted at a greater scale and magnitude to improve upon the savings for the country. Hence, it was an imperative to assess the demand upon short, medium and long-term in the country if there is an adaptation of modern technologies in the country.

Short-term Impact: The cost of moving freight in the country is at large dependent upon the road and railway transportation which involves both higher time and costs. To reduce upon the expenditure upon the movement of freight in the country and reduce the burden upon the share of GDP going under same, GoI is planning to harp upon the potential which electric vehicles and hyeprloop technologies do offer. But, in the short term from now not much can be anticipated as in India both these technologies are at a very nascent stage and the implementation plan coupled with development of infrastructure shall take its own good time. In all it looks a stiff tasks for GoI to reduce upon the the share of GDP which goes for transportation and logistics lower than 13-14% mark by 2022 unless we see drastic announcements and application in the country on new technology integration for transport.

Medium-term Impact: The plan of GoI to identify 10 key corridors of 500 km each with maximum domestic freight density factoring all modes of transport shall ease out the integration of new technology in a phased manner. However, considering the global logistics and transportation market the trend in India is diametrically opposite and hence requires the embellishment upon the coastal transportation and with projects like SAGARMALA that is achievable as well. Having, said that the role of electric vehicles shall certainly be enhanced and railway electrification embellished rates shall prove to be a boon in reducing the cost of freight movement in the country under medium term.

Long-term Impact: Undoubtedly under the long-term India as country has to determine the major routes for commodities to reduce cost and enhance efficiency for freight movement in the country and the role of new technology shall be key for same. Further if the on-land transport shall see usage of new technologies the allied infrastructure availability shall be of greater concern as well. For instance the improved facilitation of dry-ports and quick clearance process for setting them up.

Source: INCORE