Centre ADB Sign $350 Million Loan under the second subprogramme of the Strengthening Multimodal and Integrated Logistics Ecosystem (SMILE) programme. This policy-based loan agreement, signed on Friday, aims to strengthen India’s domestic manufacturing sector and improve the resilience of its supply chains. The collaboration reflects a shared commitment between the Indian government and the Asian Development Bank (ADB) to enhance logistics efficiency and bolster economic growth through strategic reforms.
The SMILE Programme: Strengthening Logistics And Supply Chains
The SMILE programme is a significant policy-based initiative designed to support wide-ranging reforms in India’s logistics sector. Structured as a programmatic policy-based loan (PBL), it comprises two subprogrammes aimed at expanding the manufacturing sector and fortifying supply chains against global and domestic disruptions. By improving multimodal logistics infrastructure at various levels—national, state, and city—the SMILE programme operationalises a comprehensive policy framework that directly aligns with India’s broader economic goals.
Centre ADB Sign $350 Million Loan To Enable Logistics Reforms
This $350 million loan will fund initiatives to standardise warehousing and logistics assets while incentivising private sector investments in the logistics space. The programme also focuses on improving external trade logistics, adopting low-emission and smart systems, and reducing operational inefficiencies. By fostering a robust logistics ecosystem, the programme aims to make India’s supply chains more resilient to challenges, ultimately benefiting manufacturers, exporters, and traders.
Signatories And Institutional Collaboration
The agreement was signed by representatives from the Department of Economic Affairs (DEA) under the Ministry of Finance, the Department for Promotion of Industry and Internal Trade (DPIIT) from the Ministry of Commerce and Industry, and the ADB. This collaboration underscores the strategic partnership between India and ADB in enhancing logistics infrastructure and driving reforms. According to the Ministry of Commerce and Industry, the partnership is a testament to shared goals of fostering innovation, efficiency, and sustainable growth in India’s logistics sector.
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Transforming India’s Logistics Landscape
India’s logistics sector is pivotal in supporting the manufacturing industry, which is a cornerstone of the country’s economic ambitions. The SMILE programme’s efforts to modernise and streamline logistics operations will reduce costs, enhance operational efficiency, and create a ripple effect throughout the economy. Additionally, it is expected to generate substantial employment opportunities, foster gender inclusion, and promote environmental sustainability through digital integration and low-emission practices.
Other Collaborative Efforts With ADB
The $350 million SMILE programme is one of several ongoing collaborations between the Indian government and ADB. On Thursday, the two entities signed a $42 million loan agreement aimed at protecting Maharashtra’s coastline and increasing the resilience of local communities and ecosystems. This project will restore and stabilise riverbanks, safeguarding the livelihoods of coastal populations. Such initiatives highlight the wide-ranging impact of India’s partnership with ADB in addressing critical infrastructure, environmental, and economic challenges.
The Importance Of Logistics Development In India
The logistics sector serves as the backbone of India’s economy, directly impacting the competitiveness of its manufacturing sector. High logistics costs have long been a challenge, accounting for nearly 14% of India’s GDP—significantly higher than the global average of 8-10%. The SMILE programme seeks to address this disparity by integrating digital solutions, improving infrastructure, and standardising processes across the logistics value chain. These reforms are expected to reduce costs, improve delivery timelines, and increase global competitiveness.
Moreover, the SMILE programme aligns with India’s Make in India and Atmanirbhar Bharat initiatives by ensuring that logistics reforms are implemented to benefit both domestic manufacturers and international traders. By enhancing supply chain resilience, India can position itself as a global manufacturing hub capable of withstanding global disruptions such as pandemics, geopolitical tensions, or climate-related challenges.
Creating A Sustainable And Inclusive Ecosystem
The programme also has a strong focus on sustainability and inclusivity. Through the adoption of low-emission technologies and smart logistics systems, the SMILE programme contributes to India’s climate goals. Furthermore, by creating substantial employment opportunities and promoting gender inclusion, the programme fosters a more equitable economic landscape. This holistic approach ensures that logistics reforms benefit not just businesses but also communities across the country.
Looking Ahead: The Role Of ADB In India’s Growth
ADB has played a crucial role in supporting India’s development across various sectors, including energy, transportation, and education. The SMILE programme is yet another example of how this partnership is driving transformative changes. By addressing critical gaps in logistics infrastructure and policy, ADB’s support is helping India achieve long-term economic sustainability and growth.
As the SMILE programme unfolds, it is expected to create a ripple effect that strengthens not only India’s supply chains but also its global standing as a manufacturing powerhouse. With strategic investments, policy reforms, and the adoption of cutting-edge technologies, India is poised to unlock its full economic potential.
This partnership between the Centre and ADB represents a significant milestone in India’s journey toward modernisation and growth, with the logistics sector at its heart.