What Is National Logistics Policy And How It Will Cut Transport Cost

The government plans to improve efficiency across various sectors and address issues of the high cost of logistics
What Is National Logistics Policy And How It Will Cut Transport Cost

Prime Minister Narendra Modi on his 72nd birthday announced the National Logistics Policy (NLP) to improve the logistics sector in the country for the movement of goods.

The policy is expected to focus on areas such as process re-engineering, digitisation, and multi-modal transport. 

The government plans to improve efficiency across various sectors and address issues of the high cost of logistics.

“The need for a national logistics policy was felt since the logistics cost in India is high as compared to other developed economies. It is imperative to reduce the logistics cost in India for improving the competitiveness of Indian goods both in domestic as well as export markets," an official statement said on Friday.

What Is National Logistics Policy

The government has been working on the policy for close to three years. It was delayed due to Covid-19 pandemic.

The policy is expected to bring down the logistics cost, which is as high as 12-13 per cent of the GDP to around 8 per cent of GDP in the next five years.

Through this policy, the government also looks to provide a roadmap to reduce the country’s dependence on road transport for cargo movement and explore more options such as rail, shipping, road, and air transport.

The action plan under the policy includes major features including Integration of Digital Systems, starting a Unified Logistics interface Platform (ULIP), improving Ease of Logistics (ELOG), and setting up a System Improvement Group (SIG).

What Is The Need For National Logistics Policy?

As per estimates, India’s logistics market is worth over $200 billion but the sector is defragmented as there is no single department that manages it. 

According to the Commerce Ministry, the sector is complex with more than 20 government agencies, 40 PGAs (Partner Government Agencies), 37 export promotion councils, 500 certifications, over 10,000 commodities, and a $160 billion market size. 

It also involves 200 shipping agencies, 36 logistics services, 129 ICDs (Inland Container Depots), 168 CFSs (Container Freight Stations), 50 IT ecosystems, banks, and insurance agencies.

The logistics sector provides livelihood to more than 22 million people and improving it will facilitate a 10 per cent decrease in indirect logistics costs leading to the growth of 5 to 8 per cent in exports, the commerce ministry said in a statement. 

The new policy is prepared after consultation with ministries including road transport, shipping, railways, civil aviation, etc.

The government aims to reduce the cost of logistics from 14-18 per cent of GDP to global best practices of 8 per cent by 2030. 

The policy has been brought in tandem with the Prime Minister's GatiShakti national master plan that was launched to build robust infrastructure, fill the missing gaps in logistics, and draw more investments into the country.

The Prime Minister also launched the Unified Logistics Interface Platform (ULIP) which will bring all the digital services related to the transportation sector into a single portal. 

A new digital platform–Ease of logistics Services or E-Logs–has also been launched through which industry associations can take up any issues pertaining to operations and performance with the government.

Related Stories

No stories found.
Outlook Business & Money