Economy & Market
How logistics value adds to the country’s GDP
Published
7 years agoon
By
admin
Supply creates its own demand, at least that is entirely true for India, where we run a constrained system. Logistics could add a full percentage point to GDP.
If more rail-rakes are allocated to the coal sector, one would assume that more coal rakes would move. But not so; the logistics puzzle, especially when we deal with multi-commodity, multi-zonal rail movement under constraints ranging from line capacity and safety norms on one hand and zonal coordination on locomotives and crew, guard, on the other, is far more complex to comprehend.
So against the first quarter 2018, in the second quarter India moved less coal rakes although the clear allocation was to move more coal rakes. The overall movement of rakes across all commodities also came down in the second quarter over the first quarter of 2018. This clearly shifted many commodities from rail to road, thus raising the cost of the system and therefore impacted GDP.
Why is it so? Three factors came in the way:
- Empty movement increased as out of turn rakes moved into coal which were earlier moving to other commodities, increased the empty rake run. Every rake moving an extra empty run reduced the overall rake movement with load.
- Optimising rake movement with constraints need multi-commodity handshakes, a rake moving the first leg with iron ore could end up with coal in the second leg and slag i the third leg. When the allocation changes to coal in the first leg, the whole optimisation puzzle changes to new constraints and new solutions.
- Inter-zonal and intra-zonal coordination for maximising rake movement precludes exchange of information so as to deliver one single objective function, which is maximising overall movement. When this objective function is changed to maximising coal rake movement, the coordination needs to move at two levels, which at times becomes impossible to handle as constraints increase.
India’s GDP is tied to higher production and output in the core sector, which can only happen if more commodities move; among all, coal, iron ore, steel, clinker, slag, cement and manufactured goods constitute the bulk. If one happens without the other, we create disparities of several kinds.
So the logistics spillover to road movement is a reality, but this surely comes at a cost. In the US, where 70 per cent of the movement is by road, no one moves bulk goods by road, other than the first or the last mile, this is sheer factor-advantage that cannot be relegated to wasteful economics.
Raising cost of movement due to a switch to road displaces factor advantages and raises the cost of the overall system. It impacts GDP as costs rise, it reduces consumption or when firm profits are impacted, the alternatives are not necessarily those that would add to the GDP.
Logistics is one of the most value adding components of GDP, this is better understood if we replace the country GDP with the firm GDP, which is net value added for the firm. When you raise cost of the system, the value added comes down whereas when you aid the flow, the value gets unlocked in higher EBIDTA.
Going back to our coal movement example, by attempting to increase the flow of coal, we ended up improving neither the coal movement nor the overall movement of all other commodities by rail and created the spillover effects in road, which added to overall cost of the system, thus impacting GDP negatively.
Spillover effects are generally negative to GDP, shifting from rail to road for bulk materials is one of them.
Is this a solvable puzzle? Of course it is, surely the puzzle would get sorted out but a lost GDP will remain a lost opportunity forever.
It is like the sale loss, could it be ever made up, I am not sure. To look at it differently if we would have added all the lost opportunities of moving stuff, the loss in value added would have knocked out a full percentage point from GDP.
Moving stuff efficiently is logistics, not just moving stuff any which way we can. The former adds to the net value added, whereas the latter destroys value.
By shifting rail to road for bulk goods, we could be doing the same for GDP.
The logic similarly could be extended to road as well, if we think by adding more vehicles we can move more stuff efficiently, we would be making the same mistake.
Optimisation is about solving these inter-connected puzzles, but the best we can do is demonstrating that we are keen to exchange more information and remove barriers that come in the way of transparent data.
Exchange of information in a constrained based system and along organisational interfaces where conflicting objective functions clash with each other, is one area of development in India. While digital information systems have improved and we have far higher transparency, we still lack the organisational reinforcements needed to deal with this.
One such neglected area is the inbound transportation versus the outbound transportation and the synergies mostly are never fully harnessed as the two are looked after by two different organisations. This is far more acute sometimes within the same supply chain where multiple commodities are moved using the same infrastructure and the missing synergies are not fully captured and acted on. Horizontal collaboration within supply chains where the same route is frequented by different commodities has a lot of scope to improve efficiency but the sharing of advantages is not fully garnered due to lack of organisational effort. This is not about technology, but the softer areas of barrier-less organisation must follow through with the efforts needed to transform.
Logistics, remains one of the most neglected functions in India, but things need to change fast as supply bottlenecks would continue to constrain the system.
Logistics alone could add a percentage point to GDP, such is the potential.
Infrastructure holds the center piece for logistics, but it is not the only piece of the puzzle. Factors that bring in efficiency and reduces wastes in the system is where the logisticians play the most important role. Simple things like empty haulage, return loads, less stops on the road, optimised loading programme, ease of movements at check points, multi-modal movements, last mile and the first mile connectivity are few of the areas where substantial gains could be achieved.
Logistics is no more the just the tail, it is time it starts to wag the dog.
ABOUT THE AUTHOR: Procyon Mukherjee, Chief Procurement Officer of Lafarge Holcim
Economy & Market
Showcasing India’s Supply Chain Revolution
Published
1 week agoon
March 25, 2025By
admin
India’s Logistics Transformation
Emerging Trends in Logistics
- Exhibitor segments: Logistics services, material handling equipment, and logistics technology providers.
- Visitor profile: Supply chain professionals, manufacturers, 3PL/4PL operators, shipping and warehouse operators, and government officials.
- Networking and thought leadership: Exclusive panel discussions and keynote sessions with industry pioneers.
Economy & Market
Highlighting the Future of Smart, Sustainable Infra
Published
1 week agoon
March 25, 2025By
admin
Roads form the backbone of any modern economy, facilitating trade, connectivity, and socio-economic growth. Across the world, road networks continue to expand, adapting to the challenges of sustainability, urbanisation, and technological evolution. India, the world’s second-largest road network with 6.3 million km of highways, state roads, and local roads, has become a focal point for infrastructure transformation. With increasing investments in expressways, tunnels, and smart roads, the sector is poised for a technological revolution that balances innovation with sustainability.
With Bharatmala Pariyojana, India’s government has set an ambitious goal of constructing 50,000 km of expressways and access-controlled highways by 2047. The nation’s budget for road infrastructure has surged to Rs 2.6 trillion in 2023, with further increases expected in 2024. However, as roads continue to serve as a key economic driver, the industry must adapt to increasing demands for sustainable materials, automation, and intelligent transport solutions—precisely what RAHSTA Expo 2025 aims to address.
The 15th RAHSTA Expo—Asia’s premier roads and highways exhibition—will be held on September 3rd and 4th, 2025, at the Jio World Convention Centre. As part of the 11th India Construction Festival, this grand event is presented by First Construction Council and backed by key industry associations such as the National Highways Builders Federation, International Road Federation – India Chapter, and CSIR -Central Road Research Institute. With an expected 10,000+ visitors, 200+ exhibitors, and 50+ speakers, RAHSTA Expo 2025 will bring together industry leaders, policymakers, engineers, and innovators to discuss, exhibit, and implement new technologies in the global road construction industry.
RAHSTA, an acronym for Roads and Highways, encapsulates the expo’s mission: to revolutionise the road construction industry with cutting-edge technologies, materials, and safety standards. The event stands as a vital international platform where stakeholders can explore solutions for high-quality, cost-effective, and sustainable road construction. With exhibitors and attendees spanning continents, this expo fosters cross-border collaborations that shape the future of mobility.
One of the focuses of the expo is road safety, a global challenge that sees over 1.3 million deaths annually due to poorly designed and maintained roads. The event will introduce automation in construction, a transformative force that enhances efficiency in this traditionally labour-intensive industry. Attendees will witness demonstrations of AI-powered predictive maintenance, automated asphalt laying, and drone-based road inspections.
Future-proofing road construction
With growing concerns over carbon emissions, resource depletion, and climate resilience, RAHSTA Expo 2025 is putting sustainability at the forefront. Roads must not only support increasing traffic loads but also be built with environmentally friendly materials.
New innovations to be showcased at the expo include self-healing roads, plastic roads, permeable pavements, solar roads, and nano-technology-enhanced materials. These advancements will help the industry align with global sustainability goals, ensuring that infrastructure growth does not come at the cost of environmental degradation.
With the rise of smart infrastructure, the integration of Internet of Things (IoT) and Artificial Intelligence (AI) is transforming roads into intelligent transport networks. RAHSTA Expo 2025 will feature groundbreaking developments such as: smart roads with real-time traffic monitoring, predictive maintenance using Digital Twin Technology, autonomous construction machinery, and drones for surveying and quality control.
This fusion of digital technology with civil engineering is paving the way for more resilient, efficient, and adaptive road networks globally.
The India Construction Festival
RAHSTA Expo 2025 will be a flagship event under the 11th India Construction Festival, a multi-event platform that celebrates advancements in infrastructure. Alongside RAHSTA Expo, the festival will feature:
- 15th India RAHSTA Conference – Engaging discussions on policy, investment, and future technologies.
- 13th Equipment India Awards – Recognising excellence in construction equipment innovation.
- 23rd Construction World Global Awards (CWGA) – Honouring the industry’s most impactful projects and leaders.
- 20th Construction World Architect & Builder (CWAB) Awards – Honour the visionaries shaping the country’s skyline – Top Architects, Top Builders, and Noteworthy Projects.
Attendees at RAHSTA Expo will have access to these prestigious industry events, making it the most comprehensive construction and infrastructure gathering in Asia.
Be a Part of RAHSTA Expo 2025
The 15th RAHSTA Expo 2025 presents a golden opportunity for stakeholders, investors, and innovators from across the globe to converge in Mumbai and explore cutting-edge advancements in road construction. As the world moves towards more intelligent, sustainable, and resilient infrastructure, this expo will serve as the ultimate platform to drive change and innovation in the sector.
To book your exhibition space, explore sponsorship opportunities, or register as a delegate, visit:
- www.RAHSTAexpo.com
- www.IndiaConstructionFestival.com
For booking exhibition space and sponsorships, contact:
- Sujoy Gomes: +91 86577 95881 | Email: Sujoy.G@ASAPPinfoGlobal.com
For delegate registrations, contact:
- Siraj: +91 97695 77206 | Email: Siraj.K@ASAPPinfoGlobal.com
RAHSTA Expo 2025 is not just about roads—it’s about the future of mobility, sustainability, and innovation. Be there to witness the transformation of the global infrastructure industry!
Road Development Projects in Maharashtra
Maharashtra is leading the way with ambitious infrastructure projects, including several key expressways, metro systems, and coastal road developments. These projects, estimated to cost billions, are part of the state’s road development plan under the Maharashtra Samruddhi Road Development Corporation (MSRDC), Maharashtra State Industrial Development Corporation (MSIDC), and the Brihanmumbai Municipal Corporation (BMC).
The total value of these projects is significant, with the $33.14 billion allocated in the Union Budget 2025-26 for infrastructure development across India. Here are some of the key road projects in Maharashtra:
These projects represent a significant opportunity for infrastructure development, particularly in the road construction sector, which will see substantial demand for advanced construction machinery and technology.
The construction equipment industry in India is witnessing rapid growth, driven by extensive infrastructure projects across the country, particularly in the road and highway sector. The market is booming, with an expected CAGR of 12.6 per cent from 2023 to 2030. As of now, the market value of the construction equipment industry in India is approximately $7.5 billion, and it is projected to reach $18.7 billion by 2030.
This rapid growth is primarily driven by increasing infrastructure investments, including large-scale road and highway projects, which require advanced machinery, automation, and AI-powered equipment to meet the scale and complexity of these developments.
The demand for construction equipment in India presents a golden opportunity for international companies looking to enter the Indian market and capitalise on the infrastructure boom. With the industry expected to continue its growth trajectory through 2030, it offers immense potential for both existing players and new entrants in the construction machinery space.

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