MC Explains | Some key features of the National Logistics Policy

The National Logistics Policy (NLP), which will be rolled out on September 17, will play a big role in providing a boost to the logistics sector in India.

The upcoming policy is not only expected to streamline rules and address supply-side constraints but will also help provide a roadmap to reduce fuel costs and lower logistics costs.

What is the policy all about?

The Central government has been working on the National Logistics Policy for three years. The commerce ministry released a draft logistics policy for consultation in 2019, but it was delayed by the Covid-19 pandemic.

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The policy is expected to bring down the logistics cost, which is as high as 14-15 percent of India's GDP, to around 8 percent of GDP in the next five years.

It will also provide a roadmap to reduce India's high dependence on road transport for cargo movement and switch to a mix of rail, shipping, road, and air transport.

As part of the policy, the government plans to make India one of the top 25 countries in terms of the Logistics Performance Index by 2030.

What are the expected key features of the national logistics policy?

Employment generation, skilling and reducing costs will be focus areas of the upcoming national logistics policy.

The policy will include four major steps in order to bring Indian logistics on par with the global benchmark. These four steps include Integration of Digital Systems, starting a Unified Logistics interface Platform (ULIP), improving Ease of Logistics (ELOG), and setting up a System Improvement Group (SIG).

The policy aims to reduce transportation costs from 6 percent of GDP to 4 percent. Similarly, warehousing costs will be brought down from 3.5 percent of GDP to 2.5 percent. Inventory costs will be reduced from 2.5 of GDP to 1 percent and order processing/admin costs will be cut from 1 percent of GDP to 0.5 percent.

How will the NLP promote the use of technology in logistics?

The NLP will take various steps to promote the use of technology in the logistics sector in India.

One such step includes the setting up of a Unified Logistics interface Platform (ULIP) which will provide a single window e-logistics market.

ULIP will integrate seven ministries on one platform to provide logistics companies with information about cargo movement in the country.

The ULIP platform will provide logistics companies, importers, and exporters data on their cargo movement across the country and will also help provide cargo movement clearances.

The policy will also promote the use of artificial intelligence and
blockchain in India, and help to integrate India's large unorganized logistics market.

The NLP also aims to create a data analytics center for driving
greater transparency and continuous monitoring of key logistics
metrics.

How will the NLP improve coordination between ministries?

The NLP will set up a Network Planning Group (NPG) and a Service Improvement Group (SIG) to improve coordination across ministries.

The Network Planning Group will be made up of planning heads from the Ministry of Railway, Ministry of Road, Transport & Highways, Ministry of Ports, Shipping and Waterways, Ministry of Civil Aviation, Ministry of Petroleum & Natural Gas, Ministry of Power& Ministry of New and Renewable Energy and Department of Telecommunications.

While the SIG will include members of the NPG and members from the Ministry of Housing and Urban Affairs (MOHUA), Department of Revenue (CBIC and GSTN), Department of Commerce, DPIIT and any other co-opted member.

How will the NLP increase the participation of state governments in the logistics industry?

Under the policy, every state in India will have to set up a State Logistics Coordination Committee/Cell.

The policy will also annually review the performance of every state through the Logistics Ease Across Different States (LEADS) index.

The central government will also let states develop their logistics ecosystems and provide a roadmap for improving logistics efficiency.

The SIG will also carry out the annual LEADS performance index of states and union territories in India.

The agency will work closely with the State Logistics Coordination Committee / Cell and prepare a comprehensive annual State Engagement Report covering the above-mentioned aspects.