Unveiling of India’s National Logistics Policy
As the world's 5th largest economy, India is setting new export targets. Through the efforts of its various agencies, it has been able to achieve these goals. The country is becoming a manufacturing hub. With the help of National Logistics Policy (NLP), India can now look forward to becoming a more prominent player in the global market. The success of a policy can be attributed to its overall performance. In addition to being a document, NLP should also be seen as a guiding force. This is the culmination of over 8 years of efforts.
The goal of the National Logistics Policy is to provide a comprehensive framework for the country's logistics industry. It's aimed at making the country a more competitive player in the international market. One of the main goals of the NLP is to make Indian logistics more competitive in terms of international standards. While, some of the key initiatives that the policy will implement include the integration of various systems and the creation of a unified logistics interface platform. And the implementation of the policy will be monitored and reviewed by an empowered group of secretaries, which is under the Prime Minister's Gati Shakti. A service improvement group will also be formed to resolve the issues faced by the users
The policy is expected to focus on various areas such as digitization, multi-modal transport, and process re-engineering. It's important to note that high logistics costs can affect the competitiveness of Indian goods in the international market. Whereas NLP will provide a platform to the country's logistics industry that will help it reduce its costs and also aims to create a conducive environment for the growth of the industry.
What is NLP?
The policy was first introduced in 2020 during the budget speech of Finance Minister, Ms. Sitharaman. It aims to provide a comprehensive framework for the country's logistics industry. It will help improve the efficiency of the operations by implementing an integrated approach. Recently, the Minister for Commerce and Industry, mentioned that the government has been working on reducing the logistics costs in the country. The policy has been designed to provide a comprehensive action plan that includes various features such as an integrated digital logistics system, a unified interface platform, and a benchmarking system. It also aims to improve the efficiency of the operations by implementing a variety of measures. Some of these include the establishment of export-import logistics parks, human resource development, and the development of logistics parks.
Why the need for this policy?
In India, the logistics cost is high at around 11%, which is higher than the European Union and the US. There is a lack of a single department that is responsible for the country's logistics industry. Several ministries are currently handling the various aspects of the sector, such as railways, road transport, civil aviation, finance, and shipping. The logistics industry is a complex sector that has over 20 government agencies and 40 private agencies. It has a market size of around 160 billion dollars and over 10,000 commodities. It also involves over 200 shipping agencies and 36 logistics services companies. According to the Ministry of Commerce and Industry, the logistics industry has contributed over 22 million jobs in the country and is expected to contribute around 5% to the country's GDP. It is estimated that the value of the Indian logistics market is more than $200 billion.
Focus Areas
Some of the key initiatives that the government has been working on include the establishment of multiple e-commerce platforms and the development of a comprehensive framework for the transportation and warehousing industry. The implementation of the Digital System of India (IDS) will help improve the efficiency of the country's logistics industry by integrating the various systems of different ministries and agencies. This will allow them to improve the flow of information and reduce the time it takes to transport goods. The IDS will also be used to monitor the various activities related to the logistics industry. It will allow the authorities to remove any potential obstacles that might prevent them from achieving their goals. Whereas, the implementation of the National Logistics Policy will also help to improve the movement of cargo through Indian Railways. It will also help boost the country's infrastructure and develop a supporting ecosystem. According to Allcargo Logistics' chief strategy officer, the government's efforts to improve the connectivity of the country's logistics industry will eventually lead to a reduction in the cost of transporting cargo.
The turnaround times of container vessels at ports have been reduced from 44 to 26 hours. Various initiatives are being carried out to improve the country's infrastructure. Some of these include establishing new eco-friendly waterways and establishing 40 air cargo terminals. The implementation of the Goods and Services Tax (GST) has also helped reduce the paperwork for the movement of goods across the country. While, another initiative that's expected to have a positive impact on the logistics industry is the establishment of a drone policy.
The government of India has to reduce the logistics cost of doing business to around 14% of the country's GDP. It is a low-hanging fruit that can be easily be competitive globally. And the World Bank's latest logistics index shows that India is currently ranked 44th out of the world's 50 countries. It is significantly lower than the logistics costs in other developed economies such as China and Vietnam. The logistics cost in India is around 14% of the country's GDP, which is lower than the 7-8% of the developed economies.
Conclusion
The high logistics cost in India has been identified as a major issue that needs to be resolved in order to improve the competitiveness of the country's goods in both export and domestic markets. This can be done through the establishment of a national logistics policy. The reduction in logistics cost can help various sectors of the economy improve their efficiency. In 2014, the government launched a comprehensive initiative to improve the ease of doing business and the efficiency of the logistics ecosystem. The National Logistics Policy is a framework that aims to address the various issues related to the logistics ecosystem. It is also aimed at increasing the competitiveness of Indian goods and helping boost the country's economic growth. The Prime Minister's vision is to develop a world-class infrastructure by integrating all the stakeholder groups in a holistic manner. This concept was carried out through the launch of the PM GatiShakti, a national master plan for the development of multi-modal connectivity. The implementation of this project is expected to be further accelerated by the launch of the NLP.
Pic Courtsey-Ishan see from the sky at Unsplash.com
(The views expressed are those of the author and do not represent views of CESCUBE.)
