Logistics is a critical component of supply chain management. It entails the organization and management of goods flow associated with purchasing, production, warehousing, distribution, product disposal, reuse, and exchange, as well as the provision of added-value services.
As we all know, policies are created to address current issues. Government policies ensure that the economy’s future obligations/requirements are met.
A national logistics policy was felt to be necessary because logistics costs in India are high when compared to other developed economies. By establishing an overarching interdisciplinary, cross-sectoral, and multi-jurisdictional framework for the development of the entire logistics ecosystem, the policy will attempt to improve logistical infrastructure and address issues of high cost and inefficiency.
What is National Policy on Logistics?
Launched on September 17, 2022, the National Logistics Policy is a much awaited policy framework which addresses various issues of all the key stakeholders related to India’s vast yet fragmented logistic industry. According to the government, it is an effort to introduce an integrated and tech-enabled approach to logistics operations which will be effective in the whole process and will help reduce logistics costs in the country from the current levels of 13-14 percent of GDP.
With an exhaustive action plan, it was introduced with significant elements including integrated digital logistics systems; a unified logistics interface platform; ease of logistics; standardization of physical assets and benchmarking service quality standards, state engagement, human resource development and capacity building, export-import logistics, sectoral plans for efficient logistics, and facilitation of the development of multimodal logistics parks.
The policy is envisaged to take a holistic approach towards addressing various pain points of the logistics industry and has laid out a blueprint for systematic growth of the sector.
Why is National Logistics Policy Required?
The Indian logistics sector provides livelihood to more than 22 million people and improving the sector will facilitate a 10 % decrease in indirect logistics costs leading to a growth of 5 to 8% in exports.
Also, India’s logistics sector is highly defragmented and the aim is to reduce the logistics cost from the present 14% of GDP to less than 10% by 2022. India’s logistics sector is very complex with more than 20 government agencies, 37 export promotion councils, 500 certifications, 10,000 commodities, 160 billion market size. It also involves 12 million employment bases, 200 shipping agencies, 36 logistics services, 129 ICDs, 168 CFSs, 50 IT ecosystems and banks & insurance agencies. Further, 81 authorities and 500 certificates are required for import-export.
The NLP will aid the PM GatiShakti National Master Plan (PMGS-NMP) in its target to enhance multi-modal connectivity. It will build a world-class modern infrastructure by involving all stakeholders in the planning and implementation process, resulting in project efficiency and synergy.
The new logistics policy will also assist the country’s logistics sector in becoming an integrated, cost-efficient, resilient, and sustainable logistics ecosystem by covering all bases, streamlining rules, and addressing supply-side constraints.
The goal of the policy is to enhance career opportunities, boost economic growth, and promote the competitiveness of Indian commodities and facilitate speedy last-mile delivery while simultaneously aiming to reduce food waste.
The Four Components of the National Logistics Policy
(1) Unified Logistics Interface Platform (ULIP)
It will bring all the digital services related to the transportation sector into a single portal. This will also lead to smooth cargo movement.
(2) Ease of Logistic Services (E-Logs)
The industry associations can directly take up any such matters which are causing problems in their operations. This will simplify the rules and ease the logistics business.
(3) Integration of Digital System (IDS)
This will integrate 30 different systems of seven different departments, which are road transport, railway, customs, aviation, foreign trade, and commerce ministries. It will improve shorter cargo movement.
(4) System Improvement Group (SIG)
This will be used to monitor all logistics-related projects regularly and will facilitate the removal of any hurdle. The SIG will advise the government on changes to be made in existing laws and processes to improve cargo movement in the country.
Currently, the most crucial step is to take India’s economic growth to the next level and to put India’s logistics industry on the global map. National Logistics Policy is the game-changing move in this scenario. NLP (National logistics policy) enables the development of unified platforms that will provide a platform for logistics while also improving internal working and communication processes.
The new logistics policy will help the country’s logistics sector become an integrated, cost-effective, resilient, and sustainable logistics ecosystem by addressing supply-side constraints and covering all bases. Similarly, the central push for digitization through platforms such as Unified Logistics Interface Platform (ULIP) and Ease of Logistics Services (E-Logs) is essential to supporting the designed services improvement framework by enhancing regulatory interoperability, standardizing logistic processes, and bringing the entire multimodal network onto a single digital dashboard, thereby enhancing visibility and transparency for all stakeholders.