Infrastructure and Logistics- The Engine of India’s Competitive Growth

• 11 Feb 2026

This editorial is based on “Driving mobility through infrastructure and green growth” which was published in The Hindu business line on 01/02/2026. This editorial examines how Budget 2026’s infrastructure-led, green and mobility-centric strategy is reshaping India’s logistics efficiency, industrial competitiveness and long-term growth trajectory.

For Prelims: PM Gati Shakti National Master Plan,Unified Logistics Interface Platform, Infrastructure Investment Trust,Gati Shakti Cargo Terminals,Battery Energy Storage System 

For Mains: Key developments in Infra and logistics sector, Key issues and measures needed. 

As India pursues a high-growth trajectory amid global economic uncertainties, the Union Budget 2026 signals a decisive shift towards infrastructure-led and mobility-driven development. By reinforcing public capital expenditure, manufacturing depth and green growth, the Budget seeks to convert macroeconomic stability into real-sector momentum. Infrastructure is positioned not merely as a fiscal stimulus but as a multiplier for logistics efficiency, regional integration and employment generation. In this context, mobility emerges as a strategic enabler linking industrial expansion, urbanisation and sustainable growth. 

What are the Recent Developments in the Infrastructure and Logistics Sector in India? 

• Logistics Policy Payoff & Cost Reduction: For the first time, coordinated policy interventions have yielded tangible results, breaking the structural barrier of high logistics costs that historically hampered Indian exports.  
  • The synergy between PM Gati Shakti and the National Logistics Policy  is now delivering measurable economic dividends. 
  • According to the Economic Survey 2025-26 India’s logistics cost has officially dropped to 7.97% of GDP (from 13-14% a decade ago). 
  • The Unified Logistics Interface Platform (ULIP) now integrates 44 systems across ministries, facilitating 100 crore+ API transactions. 
• Strategic Railway Modernization & High-Speed Corridors: The focus has shifted from network expansion to high-density rapid connectivity, aiming to decouple passenger and freight traffic for higher efficiency.  
  • This dual strategy decongests existing lines while creating dedicated high-speed value chains for economic hubs. 
  • Budget 2026-27 proposes 7 new High-Speed Rail corridors, including Delhi-Varanasi (3h 50m) and Mumbai-Pune (48m), to slash travel time by 60-70%. 
  • Further, the East-West Dedicated Freight Corridor (Dankuni to Surat) received expedited funding to integrate eastern mineral belts with western ports. 
• Green Infrastructure & Accelerate Energy Transition: The government is aggressively embedding sustainability into infrastructure and mobility, moving from "grey" concrete projects to "green" resilient systems to meet Net Zero 2070 targets.  
  • This "Green Growth" strategy reduces long-term carbon risks for industrial assets. 
  • A massive ₹20,000 crore allocation for Carbon Capture, Utilization, and Storage (CCUS) and a target to operationalize 500 GW renewable energy by 2030. 
  • Moreover, PM Surya Ghar scheme's allocation rose to ₹22,000 crore (FY27), targeting 1 crore households to decentralize power infrastructure. 
    • Also, between FY22 and early FY25, the number of public charging stations in India surged from approximately 5,000 to over 26,000. 
• Port-Led Development & Inland Waterways: There is a decisive pivot towards coastal shipping and inland waterways to reduce the modal share of expensive road transport and lower carbon footprints.  
  • The strategy aims to activate India’s coastline and river systems as cheap, alternative freight expressways. 
  • The Budget 2026 calls for operationalizing 20 new National Waterways and introduces a Coastal Cargo Promotion Scheme to shift freight from road to water. 
    • Also, new ship repair ecosystems are being developed in Varanasi and Patna. 
• Road Infrastructure- Access-Controlled Efficiency: NHAI's strategy has evolved from simple lane widening to building access-controlled economic corridors that function as high-speed arteries for freight.  
  • The focus is now on "Ring Roads" and bypasses to segregate urban traffic from long-haul logistics. 
  • For instance, ₹3.09 lakh crore allocated to MoRTH (FY27), with a target to construct 10,000 km of highways in 2025-26. 
    • The Delhi-Mumbai Expressway, now fully operational in key stretches, will significantly reduce travel time between Mumbai and Delhi from 24 hours to 12 hours, enabling faster perishable goods transport. 
• Digital Public Infrastructure (DPI) in Logistics: India is effectively "financializing" and "digitizing" infrastructure, using DPI to de-risk projects and attract private credit. 
  • This creates a transparent data layer that allows real-time monitoring and faster credit flow to infrastructure developers. 
  • The integration of "Logistics as a Service" on ONDC has broken the monopoly of closed-loop supply chains, allowing MSMEs to access enterprise-grade delivery networks (like Delhivery or Dunzo) on a pay-per-use basis. 
  • PM Gati Shakti platform now hosts 1,700+ data layers across 57 ministries, reducing project planning time from months to weeks for agencies like NHAI. 
• Civil Aviation- Transition to a Global MRO & Seaplane Hub: The government is pivoting from simple airport construction to creating a comprehensive "Design-to-Maintenance" ecosystem, aiming to retain billions in forex currently spent on foreign aircraft servicing.  
  • By dismantling tax barriers, India is positioning itself as the primary aviation service center for South Asia and beyond. 
  • Budget 2026-27 announced a zero basic customs duty on aircraft parts and raw materials for MRO, supporting a projected passenger surge to 665 million by 2031. 
  • Large-scale civilian MRO facilities by Air India and IndiGo in Bengaluru are now under construction to handle wide-body aircraft domestically. 
• Energy Storage- The 10-Fold Battery Infrastructure Leap: Infrastructure is being "future-proofed" by integrating massive storage capacities to handle the intermittent nature of the targeted 500 GW renewable grid.  
  • This shift from generation to stabilization ensures industrial logistics have access to 24/7 "Green Power," crucial for global ESG compliance. 
  • India's battery energy storage installation is set to surge 10-fold to 5 GWh in 2026, supported by a ₹5,400 crore Viability Gap Funding (VGF) for 30 GWh of standalone BESS. 
  • Moreover, Adani group is commissioning one of the world's largest single-location BESS projects (3,530 MWh) in Gujarat to stabilize the regional industrial grid. 
• Semiconductor Logistics- Building "Silicon Corridors": The launch of India Semiconductor Mission (ISM) 2.0 signals a move toward high-value, precision-logistics infrastructure where the "cargo" is microscopic but worth billions.  
  • This requires specialized "Clean Room" industrial parks with uninterrupted, high-quality power and water supply chains that differ from traditional heavy-industry zones. 
  • For instance, Budget 2026-27 allocated ₹40,000 crore for electronics component manufacturing and launched ISM 2.0 to develop full-stack Indian IP and supply-chain resilience. 
  • Further, 10 major projects with a total investment of ₹1.60 lakh crore (including silicon fabs and ATMP units) were approved across 6 states as of late 2025. 
• Urban Transit-Beyond Metros to "City Economic Regions": Urban planning is evolving from isolated city projects to integrated regional clusters connected by high-speed transit, effectively expanding the "labor pool" of Tier-1 cities into Tier-2/3 satellites.  
  • This "distributed urbanism" reduces the physical pressure on megacity infrastructure while spreading economic growth geographically. 
  • Approximately 1,036 km of Metro and RRTS lines are now operational across 24 cities. 
  • The breakthrough of tunnel boring machines for Delhi Metro Phase IV and the approval of Lucknow Metro Phase 1B showcase the continued momentum in non-capital metros. 

What are the Key Issues Associated with India's Infrastructure and Logistics Sector?  

• Modal Skew and Carbon Intensity: India’s logistics is critically unbalanced, with 71% of India's freight is transported through road, despite it being significantly more expensive and carbon-intensive than rail or water.  
  • This over-reliance on trucking exposes supply chains to fuel price volatility and driver shortages, creating a "high-friction" logistics environment that erodes export competitiveness compared to global peers who favor rail. 
  • For instance, Rail share stagnated at ~27-28% (2024) despite DFC commissioning.  
    • Further road freight costs ₹3.78/tonne-km vs Rail’s ₹1.96/tonne-km (NCAER 2025 Report). 
• Hinterland Connectivity Bottlenecks: While port efficiency has surged, the "last-mile" connectivity from ports to industrial clusters remains the weakest link, creating an "efficiency island" effect.  
  • High dwell times at inland container depots (ICDs) and poor road surface quality in industrial belts negate the gains made in vessel turnaround times, leading to inventory pile-ups and detention charges. 
  • While turnaround time has improved to approximately 22 hours, Inland Dwell Time continues to remain considerably high, largely due to persistent road congestion (Jawaharlal Nehru Port Authority Data, 2025). 
• Land Acquisition and Project Stalling: The complexity of land acquisition remains the largest structural bottleneck, causing massive cost overruns and deterring private capital in linear projects like highways and railways.  
  • The lack of digitized land titles and litigation delays create a "risk premium" that makes greenfield infrastructure projects financially unviable for private developers without heavy state guarantees. 
  • For instance, 35% of stalled central projects (valued >₹150 cr) are delayed solely due to land acquisition issues (PRAGATI Review 2024-25). 
• Rail Freight Basket Rigidity: Indian Railways suffers from commodity concentration risk, relying heavily on bulk commodities like coal and iron ore while losing high-value FMCG and industrial cargo to roads.  
  • This "dirty basket" dependency makes revenue vulnerable to energy transitions and limits the logistical flexibility required by modern "Just-in-Time" manufacturing supply chains. 
  • Despite setting an ambitious freight loading target of 1,702.5 MT for 2025–26, the railways recorded only a 1.68% growth in 2024–25 over the previous year, reflecting modest and slowing momentum in freight expansion. 
    • This raises concerns that target-driven projections may outpace structural demand growth, logistical competitiveness, and broader economic conditions, turning incremental gains into a policy challenge rather than a growth breakthrough. 
• Warehousing Quality and Standardization Gap: There is a severe shortage of Grade A warehousing compliant with global safety and automation standards, forcing manufacturers into inefficient, unorganized "godowns."  
  • This fragmentation leads to high inventory carrying costs and wastage, particularly in the cold chain, preventing the seamless integration of high-tech inventory management systems. 
  • Due to this, India faces an estimated annual post-harvest loss of approximately ₹92,651 crore (approx. $10.78 billion) as of 2024–2025 estimates. 
• Digital Fragmentation and MSME Exclusion: While the Unified Logistics Interface Platform (ULIP) has integrated large players, the unorganized trucking sector (75% of fleet owners own <5 trucks) remains digitally excluded.  
  • This "digital divide" creates data black holes where real-time tracking vanishes, preventing true end-to-end visibility and optimization of return loads, keeping empty run rates high. 
• Systemic Safety Failure in Civil Aviation: The sector is currently grappling with a "normalization of deviance," where airlines routinely clear aircraft with repetitive technical snags to maintain tight schedules, effectively bypassing the intent of safety protocols. 
  • This "deferred maintenance" culture has allowed critical faults, like the fuel control switch anomalies in the Boeing 787 fleet, to accumulate, transforming minor glitches into catastrophic failure points that regulators only catch post-disaster. 
  • For instance, a recent audit flagged 377 aircraft (nearly 50% of the audited fleet) for repetitive technical defects. 
• Urban Logistics and Congestion Costs:The explosive growth of Quick Commerce (10-minute delivery) is clashing with rigid urban infrastructure that lacks designated loading/unloading zones.  
  • This forces last-mile delivery into chaotic informal patterns, increasing city congestion, pollution, and delivery costs, while municipal regulations struggle to adapt to the micro-fulfillment center model. 
  • Further as per the 2025 TomTom Traffic Index (released in early 2026) peak-hour speeds in major Indian hubs have significantly deteriorated.  
    • For instance, in Bengaluru it dropped to 13.9 kmph in 2025, from 14.9 kmph in 2024. 
• Air Cargo Infrastructure Deficit: India’s ambition to become a global electronics hub is throttled by inadequate air cargo processing capacity at non-metro airports.  
  • The lack of dedicated freighter bays and slow customs clearance for time-sensitive components (semiconductors) creates a bottleneck that forces exporters to route goods via expensive hubs like Singapore or Dubai. 
  • Currently, 80% of India’s air cargo is carried in the "belly" of passenger planes, making the sector highly sensitive to passenger flight schedules and limiting its ability to handle oversized or specialized industrial freight. 
• Green Logistics Viability Gap: The transition to Green Logistics is stalled by the prohibitive Total Cost of Ownership (TCO) gap between Electric/Hydrogen trucks and diesel incumbents.  
  • Without a dense highway charging network and viable financing for heavy-duty EVs, "sustainability" remains a corporate buzzword rather than an operational reality for long-haul freight. 
  • For example, Electric Truck penetration is less than 1% in heavy commercial vehicles (2025) and diesel trucks still contribute ~60% of transport emissions (IEA India Report 2024). 
• Private Investment Risk Aversion: Private sector participation in infrastructure (Private GFCF) remains tepid, forcing the government to do the "heavy lifting" via Gross Budgetary Support (GBS).  
  • The private sector's hesitancy stems from past experience with stalled projects and rigid concession agreements, creating a funding gap that fiscally constrains the state’s ability to maintain CAPEX momentum. 

What Measures are Needed to Strengthen the Infrastructure and Logistic Sector in India?  

• Institutionalizing "Gati Shakti" for Predictive Infrastructure Planning: India must move beyond static mapping to dynamic, predictive planning using the PM Gati Shakti National Master Plan.  
  • By integrating AI-driven layers that predict industrial demand 5-10 years out, we can build infrastructure before bottlenecks emerge rather than reactively.  
  • This involves mandating that all future connectivity projects, whether road, rail, or optical fiber, pass through a "Gati Shakti Stress Test" to ensure they align with economic clusters and minimize ecological disruption. 
• Aggressive Modal Shift to Rail via DFC Feeders: India relies too heavily on roads, to balance this, India needs to treat the Eastern and Western DFCs not just as tracks, but as economic spines.  
  • The critical measure here is developing "Last-Mile Rail Feeders" that connect private industrial parks directly to the DFC network without touching national highways.  
  • This requires a liberalized "Private Siding Policy" where private players can build and operate short-haul rail links with minimal bureaucratic interference. 
• Implementing a "Unified Logistics Interface Platform" (ULIP) 2.0: While ULIP currently integrates data, the next step is interoperable smart contracts powered by blockchain to automate payments and compliance.  
  • India needs a "Single Window Logistics e-Marketplace" where a manufacturer can book a truck, a train slot, and a warehouse space in one click, with instant customs clearance.  
• Operationalizing "Hub-and-Spoke" Multi-Modal Logistics Parks (MMLPs): To solve urban congestion, we must accelerate the commissioning of the planned MMLPs by adopting a strict "Plug-and-Play" land acquisition model.  
  • These parks should serve as giant consolidation hubs outside major cities, where heavy trucks offload cargo to smaller electric fleets for city entry.  
  • The measure here is to offer "Viability Gap Funding" specifically for private developers who integrate automated sorting and cold-storage facilities within these parks. 
• Decarbonization via "Green Freight Corridors" and EV Integration: There is a need to designate specific high-volume routes (like Delhi-Mumbai or Chennai-Bangalore) as "Green Freight Corridors" where tolls are discounted for electric or hydrogen-powered trucks.  
  • Simultaneously, the government should mandate that a fixed percentage of "Last-Mile Delivery" fleets in Tier-1 cities transition to EVs in a given timeline. 
  • This creates a guaranteed market for OEMs to invest in heavy-duty electric logistics vehicles, reducing the sector's carbon footprint. 
• Unlocking Capital through "Asset Monetization" and InvITs: To fund these massive projects without fiscal slippage, we must aggressively expand the Infrastructure Investment Trust (InvIT) model to include operational warehouses, railway stadiums, and port terminals.  
  • By selling the "rights to operate" stabilized assets to global pension funds, the government can recycle capital into building new greenfield projects.  
  • This turns completed infrastructure into a funding engine for future development. 
• Revitalizing Coastal Shipping with "Blue Economy" Incentives: India’s long coastline is underutilized; we need a "Coastal Berth Scheme" that incentivizes smaller ports to handle domestic cargo, not just EXIM trade.  
  • A key measure is to offer a "Cabotage Relaxation" for specialized vessels (like Ro-Ro car carriers) and subsidize the "first and last nautical mile" to make water transport cheaper than rail.  
  • This relieves pressure on the railway network and reduces overall fuel import dependency. 
• Restoring Aviation Safety through Zero-Tolerance Regulatory Architecture: The sector requires a structural reset from reactive oversight to proactive, risk-based supervision to eliminate the “normalization of deviance.”  
  • This demands institutionalizing a Zero-Deferred Defect Policy for critical systems, where repetitive snags automatically trigger mandatory grounding and third-party technical audits rather than airline-level discretion. 
  • Further, DGCA should operationalize a Real-Time Aircraft Health Monitoring Grid, integrating predictive analytics and AI-driven fault trend detection across fleets to flag anomaly patterns before they escalate into systemic risks. 
• Skilling the Workforce for "Logistics 4.0": The sector suffers from a shortage of skilled labor to handle modern tech; we need a "National Logistics Skilling Mission" focused on drone operations, warehouse robotics, and data analytics.  
  • This involves setting up "Centers of Excellence" at major ports and MMLPs where gig workers (truck drivers, delivery partners) are upskilled and certified. 
  • Formalizing this workforce ensures higher productivity and reduces the high accident and attrition rates plaguing the sector. 

Conclusion:

India’s infrastructure and logistics transformation marks a structural shift from cost-heavy, fragmented networks to integrated, green and technology-driven systems. While Budget 2026 has accelerated momentum through capex, digitisation and sustainability, persistent bottlenecks in land, modal balance and private investment remain. The challenge ahead lies in converting physical assets into productivity-enhancing economic corridors. A coordinated push combining governance reform, green finance and multimodal integration is essential to sustain India’s global competitiveness. 

Drishti Mains Question

Infrastructure-led growth has emerged as the central pillar of India’s economic strategy. Examine how recent logistics and mobility reforms support this transition.

 

FAQs

1. What is PM Gati Shakti? 
A digital national master plan for integrated infrastructure planning. 

2. Why are Dedicated Freight Corridors important? 
They separate freight from passenger traffic, improving logistics efficiency. 

3. What is ULIP? 
A unified digital platform integrating logistics data across ministries. 

4. Why is modal shift critical for India? 
Road-dominated freight raises costs and carbon emissions. 

5. What is Green Logistics? 
Low-carbon transport using rail, waterways, EVs and clean energy. 

UPSC Civil Services Examination, Previous Year Questions (PYQs) 

Prelims

Q1. With reference to ‘National Investment and Infrastructure Fund’, which of the following statements is/are correct? (2017) 

1. It is an organ of NITI Aayog.
2. It has a corpus of `4,00,000 crore at present.

Select the correct answer using the code given below: 

(a) 1 only 

(b) 2 only 

(c) Both 1 and 2 

(d) Neither 1 nor 2 

Ans: (d) 

Q2. In India, the term “Public Key Infrastructure” is used in the context of (2020) 

(a) Digital security infrastructure 

(b) Food security infrastructure 

(c) Health care and education infrastructure 

(d) Telecommunication and transportation infrastructure 

Ans: (a) 

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Mains 

Q. “Investment in infrastructure is essential for more rapid and inclusive economic growth.” Discuss in the light of India’s experience. (2021)