National Logistics Policy

  • Category
    Economy
  • Published
    13th Feb, 2020

Context

Union Minister of Commerce and Industry of the policy reviewed the draft National Logistics Policy and proposed action plan for implementation prepared by the Department of Logistics, Ministry of Commerce and Industry.

About

  • The draft National Logistics Policy has been prepared in consultation with the Ministries of Railways, Road Transport and Highways, Shipping and Civil Aviation and forty-six Partnering Government Agencies (PGAs).
  • Objective: To streamline rules, address supply-side constraints, lower logistics costs and ensure greater competitiveness for Indian products worldwide.
  • National Logistics e-marketplace: A National Logistics e-marketplace will be created as a one stop marketplace.
    • It will involve simplification of documentation for exports/imports and drive transparency through digitization of processes involving Customs, PGAs etc in regulatory, certification and compliance services.
  • Institutional Framework for policy: For purpose of the new logistics framework, four committees/councils will be constituted:
    • National Council for Logistics, chaired by the Prime Minister.
    • Apex inter-ministerial Committee, chaired by the Minister of Commerce and Industry.
    • India Logistics Forum chaired by the Commerce Secretary with representation from key industry/business stakeholders and academia.
    • Empowered task force on logistics will be created, as a standing committee chaired by the head of the Logistics Wing.

Need for National Logistics Policy

  • Unregulated and fragmented logistics sector: India’s logistics sector has remained fragmented and unregulated, despite its centrality to economic growth.
  • Complex sector:The sector is very complex with more than 20 government agencies, 40 PGAs, 37 export promotion councils, 500 certifications, 10000 commodities, 160 billion market sizes along with 12 million employment base.
    • The national logistics policy will clarify the roles of the Union government, state governments and key regulators
  • High cost:The cost of logistics for India is about 14 per cent of its GDP and it is far higher as compared to other countries.
  • Lack of adequate infrastructure:Almost 25-30% of fruits and vegetables produced in India are wasted due to lack of cold chain infrastructure

The draft National Logistics Policy

  • Optimise modal mix:The draft policy has sought to optimize the modal mix (road-60%, rail-31%, water-9%) to global benchmarks (road - 25-30%, rail - 50-55%, water - 20-25%) and promote the development of multi-modal infrastructure.
  • Logistics Wing: The policy recommends setting up a Logistics Wing that will be the nodal agency tasked to identify key projects for driving first mile and last mile connectivity and to optimize the modal mix to identify commodity and corridor for the most cost-effective mode of transport.
  • Logistics centre of Excellence: Encourage industry, academia and government to come together to create a logistics Centre of Excellence, and drive innovation in the logistics sector.

Objectives of the Logistics Policy

  • Providing an impetus to trade and hence economic growth by driving competitiveness in exports.
  • Doubling employment in the logistics sector by generating additional 10-15 million jobs and focus on enhancing skills in the sector and encouraging gender diversity.
  • Improve India’s ranking in the Logistics Performance Index.
  • Strengthening the warehousing sector in India by improving the quality of storage infrastructure including specialized warehouses across the country.
  • Reducing losses due to agro-wastage to less than 5% through effective agro-logistics.
  • Providing impetus to MSME sectorin the country through a cost-effective logistics network.
  • Promoting cross regional trade on e-commerce platforms by enabling a seamless flow of goods.
  • Encouraging adoption of green logisticsin the country.

Benefits

  • Impetus to employment and growth:The Indian logistics sector provides livelihood to more than 22 million people and improving the sector will facilitate 10% decrease in indirect logistics cost, leading to a growth of 5 to 8% in exports.
  • Growth potential in logistics sector: Further, it is estimated that the worth of Indian logistics market will be around $215 billion in the next two years, compared to about $160 billion at present.

Way Forward

The development of multi-modal logistics parks and rules to do with motor vehicle movement, come under the ambit of state governments. So, there is need of alignment between the Centre and states, for better implementation and coordination of this policy.

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