Amidst the global supply chain disruptions and post-pandemic restarting of economies, businesses are looking for repurposed and reshaped supply chains that are characterized by resilience and responsibility. Many of them are accelerating their digital transformations to have better capabilities like real-time order monitoring, end-to-end inventory visibility, and exemplary reverse logistics experiences.
Against this backdrop of evolving global supply chains and realignment of export markets, the National Logistics Policy (NLP) that was drawn through a consultative process among various ministries, industry representatives, and economists, was launched by Prime Minister, Narendra Modi on September 17, and was welcomed by all the stakeholders.
NLP is expected to complement the PM Gati Shakti Plan announced last October which primarily aims at developing a multi-modal connectivity infrastructure at an investment of Rs 100 lakh cr in the coming five years. As it also envisages improving the efficiency of services such as processes, digital services, etc., the launching of NLP is a logical extension of PM Gati Shakti Plan for improving the overall logistics ecosystem of the country.
The NLP thus aims at reducing the logistics cost in India, which is currently amounting to around 13 to 14% of India’s GDP by 5% of GDP over the next five years, and thereby improving India’s ranking in the Logistics Performance Index, which in 2018 stood at 44, to figure among the top 25 countries by 2030.
Today, our logistics sector which includes facilities such as transportation services needed by the trade that is heavily dependent on road transport, storage facilities for perishables, etc., is highly fragmented and unorganized. Even the regulatory environment is equally complex as there are multiple regulations governed by various ministries and their agencies. For instance, there are as many as 20 government agencies, 37 export promotion councils and 500 certifications that oversee the logistics sector. To obviate this multiplicity, the NLP envisages a unified policy environment and an integrated institutional mechanism to enhance the competitiveness of the logistics sector.
As a part of it, NLP also aims at creating an appropriate digital framework to track and regulate systems. The ‘action-agenda’ involves immediate creation of a ‘Unified Logistics Interface Platform’ with UPI-like characteristics, which can act as a secured network to enable shippers, consignees, as well as government agencies to access real-time information. It will also assist micro, small, and medium enterprises, which are considered to be the largest source of formal employment in the country. Another noteworthy feature of the policy is the E-logS dashboard for documentation and processes, which is expected to benefit particularly, textiles and gems and jewelry exporters by saving their time in handling the formalities. This whole process of digitalization is likely to result in a data-driven decision support mechanism that ushers in an efficient logistics ecosystem.
The plan also aims at the creation of warehousing facilities that confirm to global standards, benchmark service quality standards, facilitation of the development of logistics parks, etc. Simply put, the whole policy aims at “developing a technologically-enabled, integrated, cost-efficient, resilient, sustainable and trusted logistics ecosystem for accelerated and inclusive growth.”
It hardly needs to be stressed here that for the policy to be effective, there must be, as even the stakeholders desire, an alignment of policy across all states. Encouragingly, 14 states are reported to have already developed their logistics policies in line with the NLP. So, it is hoped that the remaining states too will fall in line soon.
Obviously, the policy is also expected to encourage investment across the logistics sector in a big way. Nevertheless, mobilization of funds for such long-term investments is not going to be that easy. The government may have to therefore encourage a variety of Public-Private Partnership options to ground the policy with no loss of time. As the trade is hoping for, what the NLP needs to drive in is: its effective implementation with speed.