Explained: Why clean, cost-effective logistics are essential as freight movement in India goes up

India can save Rs 3.11 lakh crore worth of fuel by 2050 and reduce 10 gigatonnes of carbon dioxide by 2030 by deploying a clean and cost-effective mode of goods transportation, according to a report from NITI Aayog and Rocky Mountain Institute (RMI).

Through these measures, India can reduce cost of logistics by 4 percent of the country’s gross domestic product (GDP). Presently, the cost of logistics stands at 13 percent of total costs for companies, which sets back exports in comparison with countries like China.

What are the NITI Aayog, RMI recommendations?

The recommendations include increasing the rail network’s capacity, promoting intermodal transport, improving warehousing and trucking practices, policy measures and pilot projects for clean technology adoption, and stricter fuel economy standards.

When successfully deployed at scale, the proposed solutions can help India establish itself as a leader in logistics innovation and efficiency in the Asia–Pacific region and beyond, a government press release noted.

Why is logistics innovation needed?

The report titled ‘Fast Tracking Freight in India: A Roadmap for Clean and Cost-Effective Goods Transport’ says freight transport demand is expected to grow rapidly in the future due to a rising demand for goods and services. “India handles 4.6 billion tonnes of goods each year, amounting to a total annual cost of Rs 9.5 lakh crore,” it says.

While this boosts economic parameters, it leads to higher emissions, which in turn leads to a rise in air pollution in cities. India, the world’s third-largest emitter of carbon dioxide, has the potential to reduce nitrogen oxide and particulate matter emissions by 35 percent and 28 percent respectively by 2050.

As India’s freight activity grows five-fold by 2050 and about 400 million citizens move to cities, a system transformation can help uplift the freight sector. “Freight transportation is a critical backbone of India’s growing economy, and now more than ever, it’s important to make this transport system more cost-effective, efficient, and cleaner. Efficient freight transport will also play an essential role in realising the benefits of existing government initiatives such as Make in India, Aatmanirbhar Bharat, and Digital India,” said Sudhendu J Sinha, Advisor (Transport and Electric Mobility), NITI Aayog.

India is expected to become the most populous country by 2027. India’s challenge lies in boosting the economy “without putting out enough carbon to break the world,” Ajay Mathur, a former Indian climate negotiator and a member of Indian Prime Minister Narendra Modi’s council on climate change, told Washington Post.

India’s green moves

The report comes at a time when India is had made it’s a significant push for green mobility by working towards pushing its electric vehicles (EV) programme. The Centre has also approved Rs 18,100 crore production linked incentive (PLI) scheme to make lithium-ion cells, a move that will attract investments worth Rs 45,000 crore.

As a part of the world’s biggest clean energy programme, Convergence Energy Services Ltd (CESL) aims to supply 2,00,000 two-wheeled electric vehicles (EVs) and 3,00,000 three-wheeled EVs across India. Apart from optimisation of logistics, tapping into efficient rail transport and shifts to clean fuel vehicles will also contribute to India saving Rs 311 lakh crore cumulatively over the next three decades, RMI’s managing director Clay Stranger said.

According to Washington Post, Indian officials say they will meet two pledges under the Paris agreement on climate change ahead of schedule – to ensure that 40 percent of its electricity generation capacity comes from non-fossil fuel sources by 2030; and reduce its emissions intensity, the ratio of total emissions to gross domestic product, by at least one-third compared to the year 2005. The country has increased its solar energy capacity more than twelvefold since 2014.

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