WHAT HAS HAPPENED?
To give a fillip to the country's logistics sector, Prime Minister Narendra Modi on Saturday unveiled the National Logistics Policy (NLP) in what's billed as the country's first holistic approach for the $200 billion sector.
The new policy, first introduced in the Budget 2020 speech by Finance Minister Nirmala Sitharaman, was unveiled on Modi's birthday.
The new policy will bring in an integrated and tech enabled approach to logistics operations to bridge the efficiency gap.
WHAT PM MODI SAID ?
"We are the world's 5th largest economy. India is setting new targets for exports and we have been able to achieve those targets.
India is emerging as a global manufacturing hub and the world has started recognising that fact. NLP will provide a fresh impetus to it," said Modi. "There is a connection with the launch of National Logistics Policy and the release of cheetahs on the same day. We want our logistics to move at the same speed of the Cheetah," the PM said.
Modi added that turnaround of container vessels at ports has been reduced from 44 hours to 26 hours.
New eco-friendly waterways are being setup, 40 air cargo terminals have been setup to facilitate exports, 30 airports have cold storage facilities, and 35 multi modal logistics facilities are being setup.
He highlighted that GST has reduced paperwork for movement of goods across states. Drone transportation, he said, is also likely to emerge as a significant logistics mode.
AIM OF THE POLICY
India's logistics sector is largely unorganized and fragmented, which is why the country's logistics costs are as high as 14-15% of the GDP, Against 7-8% in developed nations such as the Singapore and the US, who leverage it to boost exports.
The NLP aims to bring down India's logistics cost to 8% in the next five years.
As per some estimates, about 16% of India's agri-production is wasted at different stages of the supply chain.
The policy seeks to limit losses incurred while transporting perishable commodities to under 5% by improving the warehouse facilities and cold chain efficiency.
IMPACT OF HIGHER COST
As per an Arthur D. Little-CII report, higher logistics cost is leading to a competitiveness gap of $180 billion for India, and this gap is likely to go up to $500 billion by 2030.
Experts highlight the high logistics costs can be attributed to an unfavourable policy regime, and an under leveraged multimodal transport system heavily skewed in favour of road transport.
ROLE OF TECHNOLOGY
The NLP will aim to harness technologies such as Al and blockchain.
It aims to create a data analytics centre for driving greater transparency and continuous monitoring of key logistics metrics.
Currently, several certifications are required, slowing the entire process. Moreover, due to factors such as limited capacity and availability of warehouses, the cost of transaction increases.
Under NLP, a single window portal will be created, where service providers such as warehousing providers, shipping experts, transporters, customs brokers, and various governmental agencies will be unified.
WILL IT BOOST COOPERATION BETWEEN MINISTRIES ?
That's the expectation. Currently, the logistics value chain is managed by several ministries-road transport and highways, shipping, railways, and civil aviation.
Agencies like the Central Drug Standard Control Organization and the Food Safety and Standard Authority of India provide clearances. The NLP could enhance their integration at the central level.
WHAT ABOUT CARBON FOOTPRINT ?
The logistics policy lays emphasis on the shift to more energy-efficient means of transportation, as well as the use of greener fuels which could reduce the supply chain's carbon footprint.
Moreover it emphasizes on creating regulations for controlling vehicular noise, emissions, and wastage.
The new logistics policy also aims to incorporate green principles in the functioning of warehouses which contribute to nearly 10% of the logistics costs.
WILL IT CHANGE INDIA'S COMMODITY TRANSPORT ?
The policy aims to focus on the transport of crucial commodities such as coal, steel, iron ore, food grains, steel, cement, fruits and vegetables.
The current logistical network for transporting them is mainly confined to regional clusters.
The NLP could help establish a link between the place of origin, and destination place and integrate the supply on a national level.
The policy also proposes identification of the right mode of transport for each of these commodities to minimise losses during transport.
