The National Logistics Policy (NLP), launched in September 2022, seeks to reduce logistics costs to 8 per cent from the current 13-14 per cent of GDP by 2030, through an integrated, cross-sectoral framework. By promoting infrastructure development, digital integration, and better coordination across stakeholders, the policy aims to create a seamless, technology-driven logistics ecosystem.
The PM Gati Shakti National Master Plan launched in October 2021 complements the NLP by integrating multiple modes of transport into a coordinated network while promoting multi-modal logistics parks and allied infrastructure to boost connectivity and efficiency.
Clean transport
Railways are a far greener and cheaper mode of transport vis-à-vis road or air and enhancing freight carriage by Indian Railways (IR), therefore, is of significance. So reducing logistics costs hinges on raising the modal share of rail freight from around 27 per cent in 2022 to 45 per cent by 2030, increasing average freight train speeds from around 25 kmph to 50 kmph, and achieving originating loading of 3000 million tonnes (mt) by 2027 — objectives that also formed part of IR’s own initiatives like the National Rail Plan (NRP), Mission Raftar and Mission 3000 mt.
The performance of IR so far, in spite of massive infra spending in recent years, has been remarkably underwhelming. Rail freight share has dwindled to about 25 per cent, and average freight train speeds have not improved despite commissioning of Dedicated Freight Corridors (DFCs). Originating loading in FY25 was only 1617 mt, with annual growth of loading and freight earnings at less than 2 per cent in spite of the economy growing at over 6 per cent.
It was, therefore, surprising when Minister of Road Transport and Highways Nitin Gadkari recently affirmed that India’s logistics cost would fall to single digits by end-2026, while inaugurating major highway projects with Prime Minister Narendra Modi. But better roads alone cannot achieve this, as long-distance road haulage is inherently costlier than rail. The Minister, however, did not explain how this target could be met given the rail sector’s lacklustre performance.
There has been some progress in ULIP, the digital initiative to integrate systems and data sources for seamless information exchange, and in developing Gati Shakti multi-modal terminals (GCTs). GCTs number 80 today nationwide, though many were redesignated from ongoing works to pad the count, with 200 under plans through public-private partnership. GCTs are expected to leverage the DFCs, which currently operate only four terminals, with six more expected by FY26. Yet, despite these efforts, IR continues to cite “early days” for the lack of freight impact. That excuse wears thin: four years have passed since freight targets were set, and the promised dividends remain elusive.
Freight basket
IR’s freight basket of coal, cement, iron ore, steel, foodgrains, fertilizers and P.O.L. has changed little in decades. The share of coal — expected to decline with pithead power plants and climate concerns — has actually increased. IR’s share can rise only by attracting new traffic such as containers, automobiles, bulk cement, flyash, and consumer and perishable goods, whereas progress has been limited to the first two.
Carrying these commodities requires bold initiatives — tariff rationalisation, incentive schemes with genuine autonomy at zonal and divisional levels, development and deployment of special-purpose wagons, augmenting commodity-specific customized containerisation, time-tables freight trains and private participation. Progress in these areas remains sluggish, and customer-centric efforts rare.
Take flyash: out of about 250 mt available, IR carries only 10 mt. Despite a plan to move it in special containers, the bureaucracy failed to resolve operators’ concerns on high turnaround time and uncompetitive tariffs.
Also the much-touted Gati Shakti freight trains focus narrowly on speed of rail transfer, ignoring more critical issues of multiple handling and first-and-last mile linkages. It is high time IR sheds inertia, and crafts imaginative policies to capture traffic that rightly belongs to rail.
The writer is Retd. GM, Indian Railways and Independent Consultant Leader, Vande Bharat project
Published on September 10, 2025
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