Why in news?

The Union Cabinet approved the National Logistics Policy which aims to reduce the cost of logistics and bring efficiency by “streamlining processes, regulatory framework and skill development.”

What was the need for a logistics policy?

• Logistics broadly includes facilities crucial to trade: transport services for the movement of goods, storage facilities that are particularly essential for trade in perishable goods such as food items, fruits, and vegetables, and smooth functioning of government services that facilitate trade such as licensing and customs.

Aim of the policy

• The policy sets various targets, which includes reducing the cost of logistics from the current 13 or 14% of the GDP and bringing them down to global benchmarks by 2030, improving the Logistics Performance Index ranking and creating a data-driven decision support mechanism for an efficient logistics ecosystem.

Implementation:

• The implementation of the policy would be monitored by the Empowered Group of Secretaries (EGoS) created under the PM Gati Shakti National Master Plan.

Highlights:

Features of the new policy

• The policy has four features that will be implemented through the Comprehensive Logistics Action Plan (CLAP). It includes:
  • Integration of Digital System (IDS)
  • Unified Logistics Interface Platform (ULIP)
  • Ease of Logistics (ELOG)
  • System Improvement Group (SIG)
• The IDS will have 30 different systems of seven departments, integrating data from the road transport, railways, customs, aviation, and commerce departments.
• The ULIP will bring all the transportation-related digital services to a single portal. E-Logs will enable resolving issues as associations can reach out to the government directly.
• Furthermore, the e-handbook on the policy gives insight into the standardisation of the warehousing sector.
• CLAP comprises integrated digital logistics systems, standardisation of physical assets, benchmarking service standards, human resource development, capacity building, development of logistics parks, etc. The government will also offer management courses around Logistics and Supply Chain for the sector’s growth. Furthermore, establishing multi-modal logistics parks (MMLPs) in crucial markets will improve first- and last-mile connectivity.
• Other measures include seamless coordination between different stakeholders and speedy issue resolution, streamlined EXIM processes, human resource development to create an employable pool of skilled manpower.

What are the Initiatives Related to Logistics?

• Multimodal Transportation of Goods Act, 1993.
• PM Gati Shakti Scheme
• Multi Modal Logistics Parks
• LEADS Report
• Dedicated Freight Corridor
• Sagarmala Projects
• Bharatmala Project

Indian logistic sector

• Currently, the logistics costs in India are 13-14% of the GDP, compared to 7-8% in developed countries. The higher logistics costs are reducing the competitiveness of India’s exports.
• Reports suggest that higher logistics cost is leading to a competitiveness gap of $180 billion for India, and the difference will increase to $500 billion by 2030.
• The World Bank Logistics Index places India at the 44th position in logistics costs, even behind China and Vietnam, which are at 26th and 39th positions, respectively.

Long way ahead

• The NLP, in conjunction with the Gati Shakti Program, the Sagarmala and Bharatmala (waterways and roadways) schemes, the Dedicated Freight Corridors, etc., can be path-breaking. The policy aims to bring a modal shift in logistics and reduce the current over-dependence on roads with over 60% against 25% globally. The global dependence on railways is 60%, whereas India’s is just 30%. Similarly, waterways have only a 5% share in the modal mix.

• The country’s economic growth largely relies on trade, and to boost the same, the focus on efficient infrastructure for the movement of goods is virtually important. The current infrastructure and policy cannot match the pace that is required from India to grow exponentially in the coming years. The policy prioritising robust infrastructure will bring cost minimisation, boosting exports and eventually adding to the country’s growth. India is right on the path to emerging as the next big economy in the world.