National logistics policy India: Purpose, highlights, objectives

With the need to adopt technology and to strengthen the logistic sector, the government has come up with several initiatives such as the digital EXIM trade process with the help of e-sanchit, GST, e-way bills, faceless assessment for customs, FASTag, etc. Also, amendments in drone policy and connecting it with the PLI scheme thereby promoting the use of drones in the logistics sector greatly help in improvising the efficiency of this sector. Here, the question arises: will National Logistics Policy (NLP) be a game-changer for the Indian economy and find its place among these successful government initiatives?

With over 20 government agencies, 40 partner government agencies, 37 export promotional councils, and 10,000 commodities, the Indian logistics industry reached $259.5 billion in 2022 (Source: World Bank’s Logistics Performance Index, 2023). However, the sector is highly decentralised, complex, and poorly streamlined, which makes logistics costs high. There comes a need for the National Logistics Policy. Though the policy gained more traction in 2021 when the PM GatiShakti National Master Plan (PMGS – NMP) was introduced. This provides a seamless multi-modal connectivity infrastructure to various economic zones.

Shri Narendra Modi (Prime Minister, India) launched the National Logistics Policy, in September 2022. A key step towards fulfilling the ‘Panch Pran’ goal of India be a developed country. The NLP was launched to reduce logistics costs, improve efficiency, and create more competitiveness globally. Using technology, promoting multimodal transportation infrastructure, streamlining the regulatory system, encouraging private sector participation, and making it easier for businesses to transport their goods.

What is the National Logistics Policy (NLP)?

NLP was designed by the Ministry of Commerce and Industry to establish a single-window e-logistics market and stress the significance of developing skills, generating employment opportunities, boosting economic growth, and competitiveness among MSMEs.

It comprises four features, including:

• Integration of Digital System- will consolidate data from various departments including road transport, railways, customs, aviation, and commerce, into a unified platform.
• Unified Logistics Interface Platform (ULIP)- will help centralise all digital services associated with the transportation sector within a single portal. Thus, providing a unified portal for easy access and management.
• Ease of Logistics (ELOG)- provide industry associations with a means to engage with the government and address any concerns effectively.
• System Imrpovement Groups (SIG)- will improve collaboration among ministries and further, promote better coordination between the central and state government. And it will operate under direct supervision of the National Logistics Council (NLC).

NLP key objectives

• To reduce the logistics costs in India to be comparable to global benchmarks by 2030. As it currently accounts for huge chunks in India’s GDP, i.e. 13-14% of GDP.
• Improve India’s ranking in the Logistics Performance Index (LPI). And secure a ranking among the top 25 countries by 2030. In 2022, the Indian LPI ranking was 38 globally (World Bank’s Logistics Performance Index (LPI), 2023).
• Implementation of a data-driven decision support mechanism to ensure an efficient logistics ecosystem.

Strategies to achieve the NLP objectives

1.Bring down logistics costs:

• Improve efficiency in transport by migrating towards a more efficient, economical, and environmentally sustainable modal mix.
• Improve the efficiency of transport systems by promoting the development of multimodal interconnected infrastructure.
• Develop sectoral strategies to optimise logistics operations. And focus on key areas to address the challenges of the first and last mile, introducing the innovative design of rolling and floating stock, improving material handling processes, etc. It also involves promoting collaborative usage of logistics infrastructure and implementing smart enforcement measures to minimise detentions.
• Create a road map to assess the capacity and potential of ports/multimodal logistics hubs, logistics parks/cargo terminals, etc. Apart from this, promote the use of drones, automation, and new technologies in logistics to harness natural resources efficiently and effectively.

2.Improve India’s LPI ranking:

• Address issues such as logistics capacity, last-mile connectivity gaps, ground-level logistics operation, and infrastructure.
• Develop a stakeholder-driven compendium of reforms based on regular reviews to enhance India’s ranking.

3.Create a data-driven decision support mechanism:

• Use the PM GatiShakti National Master Plan (PMGS NMP) to monitor various components of the logistics ecosystem.
• Develop the Unified Logistics Interface Platform (ULIP) to facilitate data sharing and collaboration between stakeholders.
• Conduct the Logistics Ease Across Different States (LEADS) study to monitor logistics performance across states.
• Develop a robust standardised methodology for calculating logistics costs and institutionalise regular national assessment of logistic costs in the economy.

(CLAP): Key initiative to improve the efficiency of India’s logistics sector

The NLP was implemented through a Comprehensive Logistics Action Plan (CLAP). CLAP is a set of government initiatives designed to improve India’s logistics sector efficiency. It has eight key action areas, and each aims to address a specific challenge facing the sector.

The challenges that are solved by the creation of CLAP include:

1. Lack of integrated digital logistics systems: The logistics sector in India is currently fragmented and lacks a unified digital platform. This makes it difficult for businesses to track their shipments, manage their inventory, and plan their logistics operations. However, to overcome this challenge, CLAP aims to develop a unified logistics interface platform (ULIP) that will link multiple data sources and extend cross-sector use cases for logistics service providers. And helps to improve efficiency and transparency in the logistics sector.
2. Lack of logistics standardisation: CLAP helps to boost interoperability, minimise handling risks, optimise processes, and improve ease of doing business. This is achieved through the standardisation of physical assets and benchmarking of logistics service quality standards. As a result, costs are reduced and the quality of services in the logistics sector is improved.
3. Lack of skilled workforce in the logistics sector: The Indian logistics sector is also facing a shortage of skilled workers. To address this, CLAP strives to develop training programs and provide incentives for businesses to hire skilled workers.
4. Lack of coordination between states in logistics: Our logistics sector is also characterised by a lack of coordination between states, leading to delays in shipments and increased costs. To overcome this challenge, CLAP provides support for the development of state/city level logistics plans. Additionally, it seeks to establish an institutional framework that enables implementation, measurement, and monitoring of actions taken by states and ranks them accordingly. This will ensure that the logistics sector is developed in a coordinated and integrated manner across the country.
5. High logistics costs for exports and imports: Another significant challenge faced by the Indian logistics sector is high transport. And it is due to some of the prominent factors including the poor condition of roads, the lack of rail connectivity, and the high cost of fuel. CLAP addresses multiple challenges such as last-mile connectivity gaps between key gateway ports and relatively high transport costs between ports and the hinterland. It also aims to improve digitalisation and procedural efficiencies, drive transparency of freight charges, and eliminate anti-competitive practices. This will help to improve the efficiency of EXIM logistics.
6. Regulatory challenges: CLAP improve the customer-facing regulatory regime, including laws, policies, rules and procedures, associated documentation and approval processes. It also promotes standardisation, formalisation, interoperability, and reduces gaps in regulatory architecture. This will help to reduce the burden of regulation on businesses and improve the ease of doing business in the logistics sector.
7. Lack of focus on specific needs of each sector in logistics: It develops sectoral plans for efficient logistics (SPEL) aligned with PM GatiShakti. SPEL will be developed for each sector with underlying philosophies of interoperability, resiliency, sustainability, and innovation. It will ensure that the logistics sector is developed in a way that meets the specific needs of each sector of the economy.
8. Lack of logistics infrastructure: It facilitates the development of logistics parks for instance multi-modal logistics parks, air freight stations, inland container depots, container freight stations, cargo terminals, and more. Though this is possible by drafting comprehensive framework guidelines and creating a network of logistics parks by mapping them on the PM GatiShakti NMP. Thus, helps to increase the availability of logistics infrastructure and improve the efficiency of the logistics sector.