The Prime Minister unveiled the National Logistics Policy that seeks to address challenges facing the transport sector and bring down the logistics cost for businesses from 13-14% to a single digit.
The policy was announced for the first time in the Union Budget 2020.
About India’s logistics sector
India’s current logistics cost as a proportion of the GDP is some 13-14 per cent.
The sector’s present market size is 160 billion USD.
Its improvement can ensure a 10 per cent decrease in indirect logistics cost and increase the growth of exports by 5 to 8 per cent.
India’s logistics sector provides jobs for more than 22 million people.
The draft policy provides for the government creating a single point of reference for all logistics and trade facilitation matters, reducing costs for the logistics sector to 10 per cent in five years.
Its focus areas are Integration of Digital System (IDS), Unified Logistics Interface Platform (ULIP), Ease of Logistics (ELOG) and System Improvement Group (SIG).
The IDS will integrate 30 different systems of seven different departments, such as customs, aviation, road transport, railways, international trade and commerce ministries.
The ULIP aims to ensure continuous monitoring of cargo movement.
The ELOG would seek to simplify procedures and achieve ease of doing business.
The SIG would monitor all projects related to logistics on a regular basis and ensure the removal of hurdles faced in the sector.
An empowered group of secretaries (EGoS) has been constituted under the PM Gati Shakti to monitor and review the implementation of the NLP.
The policy is an endeavour to improve the competitiveness of Indian goods, enhancing economic growth and increasing employment opportunities.
Logistics encompasses planning, coordinating, storing, and moving resources —people, raw materials, inventory, equipment, etc., from one location to another, from the production points to consumption, distribution, or other production points.
Aims and Objectives
The National Logistics Policy aims to:
Promote smooth movement of goods across India
boost competitiveness of the Indian goods in the domestic and international markets
bring down the logistics cost, which in turn would improve efficiency of various sectors of the economy, boosting value addition and economic growth
How government is strengthening the logistics sector?
The government is using technology to strengthen the logistics sector.
Faceless assessment has started in customs and e-way bills and FASTag are bringing efficiency in the logistics sector.
Sagarmala project to connect ports and dedicated freight corridors have started to improve logistics connectivity and systematic infrastructure development work.
Budgetary Allocation - Government allocated Rs 5.54 trillion towards capital expenditure across various ministries in the Union Budget 2021-22, a 34.5% jump from the previous year.
Mission Gati-Shakti – The mission has been launched as a national master plan for multi-modal connectivity.
This will bring nearly 16 different ministries and departments of the government together to promote coordinated planning and execution of projects.
This will aid in development of an integrated logistics and transport policy providing end-to-end connectivity.
Bharatmala Pariyojana - 34,000 km of road infrastructure works would be undertaken, of which, 11,000 km have been targeted to be completed by March 2022.
Eastern and Western Dedicated Freight Corridors - Commissioning of such corridors can be a game-changer for boosting railway freight share.
It will not only decongest the existing rail network but would allow for longer rakes to carry higher loads at an average speed of nearly 70 km/hr.
The National Air Cargo Policy has also been formulated that seeks to build air transport shipment hubs in all major airports by 2025.