National Logistics Policy : Why the new National Logistics Policy will be a game changer?

New Delhi : India has a National Logistics Policy (NLP). The central government believes that this policy will be a game changer. This is because it is claimed that this will soon end the challenges related to mail delivery or transportation and will save the producers time and money and prevent wastage of agricultural produce. The end result will be significant time and cost reduction.

After three years on the drawing board, the much-needed National Logistics Policy (NLP) has finally been launched by the Prime Minister. The Ministry of Commerce released the draft National Logistics Policy in 2019. It was intended to provide much-needed clarity on the strategies to transform Indian logistics into an organized sector which was seen as a complete puzzle involving cost additions and delays. This may be finally stopped now.

After eight years of hard work, this has become a reality, Prime Minister Modi said this time. He also expressed the belief that this policy was the beginning and not the end, a policy and performance that would energize all sectors and help transform the country into a developed nation by the end of Amrit Kal in 2047.

Logistics Demystified< /strong>

Logistics involves planning, coordinating, storing and moving resources, etc. – people, raw materials, inventory, equipment, etc., from one place to another, from point of production to consumption, distribution or other point of production. Here are some key points.

There are simple but variable targets to help benchmark policy performance.

1. Reducing the cost of logistics from 14-18 percent of GDP to 8 percent by 2030. The US, South Korea, Singapore and some European nations have such low logistics cost-to-GDP ratios. 

Assuming that current costs are 16 percent of GDP, this would mean a further improvement in global benchmarks. Assuming no, logistics costs will have to be cut in half by 2030.

2. Improving the country’s Logistics Performance Index (LPI) ranking to the top 25 countries by 2030.

Next target for ambition

1. India is the fifth largest economy in the world. If it has to move fast to rank among the three largest economies and join the league of developed nations. 

2. Aim to be in the top 10 in LPI by 2030. It should match the pace of South Korea.

3. Build a data-driven decision support system (DSS) to enable an efficient logistics ecosystem. This is the key. DSS was needed yesterday, and time is running out fast.

4. The policy aims to ensure that logistics problems are reduced, exports multiply and small scale industries and the people working in them benefit significantly.

Finally, strengthening the logistics sector will not only make doing business easier, but substantial It will also ensure job creation and improvement in wages and working conditions.

Key Building Blocks

1. The most important building block is the Unified Logistics Interface Platform (ULIP), which aims to condense all logistics and transport sector digital services into a single portal, freeing manufacturers and exporters from the current long and cumbersome process.

2. Ease of logistics services (e-log), providing a new digital platform, will directly help industries to resolve operational issues with government agencies quickly.

3. Comprehensive logistics action plan including integrated digital logistics system, standardization of physical assets, benchmarking service standards, human resource development, capacity building, development of logistics parks etc.

Agenda

Could be transformative with NLP, Gati Shakti programme, Sagarmala and Bharatmala (waterways and roads) schemes, dedicated freight corridors etc.

But a lot remains to be done.

Eg , with an obsession with world records in highway construction, the pendulum has swung too far towards road transport, a fossil fuel guzzler and an obstacle to achieving net zero by 2070. In 1980, 60 percent of freight was moved by rail. It is close to 20 percent in 2022.

The railway sector faces a number of structural deficiencies that need to be addressed quickly if logistics costs are to be halved to global benchmarks. The average speed of a freight train has stagnated at 25 kmph for decades – it should be urgently doubled to at least 50 kmph.

Railways need to operate goods on a schedule basis. Cargo needs to become an aggregator at the source and a disaggregator at the destination, to capture the high-value small-load business (as opposed to rack-load cargo).

The country has been talking about eco-friendly and cost-effective inland waterways freight for decades, but nothing has happened. . China’s river ports offer valuable learning. Road logistics is a completely fragmented sector, where a large section of truck owners have very small fleets.

Most of them are yet to fully recover from the shock of the Covid lockdown. These small operators serve tier 2/3 cities where most Micro and Small Enterprises (MSME) operate. There is a clear case for integration of small operators with government-backed integration apps. Similarly, there is a need for big players in the sector to reduce costs.

Apart from improving core functional areas, the size of our ports must increase manifold – it is not without reason that 10 of the world’s top 20 ports are in China. It is time to give wings to the air transport system and radically improve the transportation of high-value and perishable goods.

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