The Ministry of Commerce and Industry is contemplating a shift from the existing Multimodal Transportation of Goods Act, 1993 (MMTG) to a newly proposed National Logistics Efficiency and Advancement Predictability and Safety Act (NLEAPS). The purpose of this transition is to enhance the regulation of multimodal transportation of goods extending from any part of India to international locations. Multimodal transportation implies integrating various modes of transport such as rail, road, and maritime for comprehensive delivery of goods. This system was implemented to support exporters and provide them with assurance while moving their commodities.
Objective of NLEAPS
The primary goal of NLEAPS is to refine the logistics sector in India, promoting growth within this field. It plans to modernize and formalize logistics services and encourage digitalization, crucial for the seamless movement of goods. The new act aims to slash the logistics cost from the current 14% of the GDP to less than 10% of the GDP.
Rationale Behind the New Legislation
The proposed law intends to clearly define different participants in the logistics sector and create a light regulatory framework, an aspect that is missing in the MMTG. The logistics sector in India, estimated at USD 160 billion, is intricate with over 20 government bodies, 40 partnering agencies, 37 export promotion councils, 500 certifications, and 10,000 varieties of commodities.
Benefits of the Proposed Act
The effective execution of this act is expected to stimulate trade, bolster export competitiveness, and enhance India’s position in the Logistics Performance Index and Ease of Doing Business ranking.
About the Logistics Performance Index
Developed by the World Bank Group, the Logistics Performance Index (LPI) is a perceptive tool designed to assist countries in identifying their performance related to trade logistics, and their strengths and weaknesses. The LPI is derived from the average of a country’s ratings across six key dimensions, which include:
1. Efficiency of the clearance process.
2. Quality of trade and transport-related infrastructure.
3. Competitive pricing of shipments.
4. Competence and quality of logistics services.
5. Ability to track and trace consignments.
6. Timeliness of shipments.
As of 2018, India had secured the 44th position in the LPI ranking. The proposed NLEAPS act aims to revolutionize the logistics sector and enhance India’s global performance in logistics, thus bringing about tremendous developmental potential.
Last Modified: February 8, 2024