Logistics involves the comprehensive organization and management of resources, which could range from people to raw materials, from the production point to the consumption or redistribution point. The term encompasses everything from planning to storage and transportation, including potential distributors’ evaluation and accessibility.
The Government recently launched the National Logistics Policy (NLP) 2022, targeting ‘fast last-mile delivery’ and an end to transport-related challenges. This policy targets significant areas like process re-engineering, digitization, and multi-modal transport. It addresses the high logistics cost in India that hampers domestic goods’ competitiveness on the international stage.
Goals and Building Blocks of NLP 2022
The policy envisions reducing logistics costs by half to meet global benchmarks by 2030, reducing the logistics’ share in GDP from 14-18% to around 8%, equivalent to countries like the US, South Korea, Singapore, and some European nations. With a current cost standing at 16% of GDP, India, being the world’s 5th largest economy, aims to rank among the top ten in the Logistics Performance Index (LPI) by 2030.
Key building blocks of the policy include a Digital Integration System for more efficient logistics, a Unified Logistics Interface Platform to consolidate digital services into a single portal, easing logistics services through a digital platform called E-Logs, and a Comprehensive Logistics Action Plan, among others.
The Significance of the National Logistics Policy
The launch of the National Logistics Policy not only boosts the PM Gati Shakti but also aims to create an integrated, cost-efficient, resilient, and sustainable logistics ecosystem in the country. By streamlining rules, addressing supply-side constraints, and covering all bases of the sector, it makes Indian goods more competitive, spurs economic growth, and creates employment opportunities.
Logistics-Related Initiatives
Several initiatives related to logistics include the Multimodal Transportation of Goods Act 1993, the PM Gati Shakti Scheme, Multi-Modal Logistics Parks, LEADS Report, Dedicated Freight Corridor, Sagarmala Projects, and Bharatmala Project.
Overcoming Challenges and Future Directions
Despite the policy’s prospects, certain structural deficiencies in the rail sector need urgent attention for logistics costs to match global benchmarks. Increasing the average speed of freight trains from 25 kmph to at least 50 kmph and implementing a time-table based goods operation are some measures required.
Moreover, harnessing eco-friendly and cost-effective inland waterways freight movement, which has been neglected for decades, is crucial. Lessons from China’s river ports emphasizing Port Infrastructure could prove beneficial.
The road logistics sector, currently fragmented with several small fleet truck owners, could benefit from government-supported aggregated apps. In addition, there is a need for large players to drive down costs.
Furthermore, increasing the size of our ports and giving impetus to air logistics for the transportation of high-value and perishable items can significantly enhance our logistics efficacy.
Given these points, the National Logistics Policy 2022 certainly calls for meticulous coordination between the government and the private sector to realize its connectivity goal.
