India drives investment in logistics to promote higher-quality growth

Gati Shakti initiative aims to revolutionise infrastructure development

India is a sizeable and mature infrastructure market. The country’s growing and briskly urbanising population, coupled with the government’s commitment to improving living standards, has resulted in rapid growth in demand for infrastructure. As per the National Infrastructure Pipeline, the ministry of finance plans to invest over $200bn in infrastructure development annually.

India has longstanding central government ministries that focus on planning and executing a multitude of projects in the core transport segments of roads, railways, ports and waterways and airports. State governments have established departments that are responsible for infrastructure development. However, there is substantial scope to enhance the efficiency of infrastructure project development.

One of the critical gaps felt by infrastructure developers and logistics operators is harmonisation of development initiatives among the different ministries and states. The Gati Shakti initiative, launched in 2021, aims to address this gap by developing a digital information sharing platform and creating a governance framework to ensure coordinated planning of large infrastructure projects.

The National Investment and Infrastructure Fund is a key investor in infrastructure and several other vital areas of the Indian economy. Through its master fund, NIIF co-owns and actively manages portfolio companies that invest in core transport assets (roads and ports), and a large logistics platform that owns and operates a seamless and integrated freight business. Given NIIF’s substantial interests in the transport and logistics space, we stand to reap significant efficiency gains from the Gati Shakti initiative.

An issue that industry players sometimes face while considering investments in large projects – such as ports, multi-modal logistics parks, industrial zones and power generation – is uncertainty around the timely development of linkage infrastructure. For instance, while an MMLP initiative may be spearheaded by a state government, rail and highway connectivity would have to be led by the central railway and the roads ministries respectively. Similarly, a renewable energy project would depend on timely development of transmission links for evacuation of power.

An important pillar of the Gati Shakti initiative is a governance mechanism through which representatives from 16 ministries work together for planning and implementation of core infrastructure projects. The 16 ministries form part of a network planning group, and projects with an estimated value of over Inr500 crore are deliberated and approved at this forum. This mechanism of coordinated planning complements the otherwise robust project-execution capabilities of individual infrastructure ministries and states.

This coordinated development has three key benefits for the logistics sector. First, linkage infrastructure requirements for projects will be identified early and their development monitored alongside the core project. Second, missing link infrastructure projects can be identified and executed, enhancing capacity utilisation and efficiency at existing assets. Third, such joint planning can ensure that duplicative projects are avoided, reducing instances where different infrastructure departments may announce plans to develop projects that serve overlapping markets and lead to unintended competition.

Undoubtedly, the most groundbreaking feature of Gati Shakti is development of a digital master planning facility that combines close to 900 layers of information on a GIS platform. The platform is already being used for scientific planning of projects in a manner that minimises execution hurdles like requirements for special approvals, interface issues and requirement of utilities shifting. It is envisaged that for new projects this digital platform will be used to apply for clearances as well as to monitor progress.

The GIS-based planning interface, which is presently available to government ministries and departments, will eventually be opened for access to all. It will allow investors to have a bird’s eye view of infrastructure service gaps and identify opportunities where new assets may be created by considering available land parcels and easy availability of complementing infrastructure. This will be a powerful planning tool for private investors.

The Gati Shakti initiative is a significant step forward for harmonisation of efforts across government agencies. It will be a tool to drive investment and operational efficiencies in infrastructure, especially for the transport and logistics sector. Improved coordination among stakeholders and enhanced transparency in project execution may further boost the confidence of global investors in increasing allocations to India.

Saurabh Suneja is Director, Strategic Initiatives and Policy Advisory, National Investment and Infrastructure Fund, India.

To find out why global public funds are increasingly turning to India over China, download OMFIF’s Global Public Pensions 2023 report.


Join Today

Connect with our membership team

Scroll to Top