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National Logistic Policy a right step towards a well-integrated, efficient freight system

The intent of the NLP is very much aligned with the aspirations to become a leading global manufacturing hub 

September 22, 2022 / 09:42 AM IST
Representative Image

Representative Image

India has a growing logistics sector representing 5 percent of India’s Gross Domestic Product (GDP), and directly employing 22 million people. India has the second-largest road network in the world, through which 68 percent of the freight movement happens, along with a well-functioning rail and coastal logistics network.

India has improved its logistics performance from 54th in 2014 to 44th in 2018 in the World Bank Logistics Performance Index, and aspires to move to the first 25 positions in the coming years.

The National Logistics Policy, unveiled on September 17, was drafted to integrate the developments in the logistics sector to increase the efficiency of the freight modes through the development of Multimodal Logistics Parks, and the setting up of logistics data and analytics centres. The policy follows a multifaceted approach to decrease the transportation cost, increase efficiency to promote domestic and foreign trade, and take the necessary steps to increase the competitiveness of Indian goods. The policy will set up a knowledge- and information-sharing platform as the point of reference, and an e-marketplace for seamless transfer of logistics. Currently, the cost of transportation is 13-14 percent of the GDP, and the policy aspires to bring it down to 10 percent.

An inefficient transport network has weakened India’s logistics sector to reach the goal of last-mile delivery, lack of proper warehousing facilities, and lack of co-ordination between different sections of the freight sector. The logistics sector is dealt with by more than 20 government agencies and 40 partner government agencies, and often there is very little policy co-ordination between these agencies. The lack of industry readiness, and poor logistics-related infrastructure has spiked transportation cost in India.

As a comprehensive, multifaceted framework to solve the issues of the freight sector, the policy can be seen as the right step toward a well-integrated and efficient freight system. The policy demands restructuring the procedures across the various departments and services, and integrating cutting-edge technology and increased digitisation. Along with the improvement in the existing road and rail networks, and modern cargo facilities, it emphasises the development of the warehouse sector to promote cross-regional trade, and boost the effectiveness of agri-logistics in bringing down the wastage of agricultural products to less than 5 percent.

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The intent of the NLP is very much aligned with the aspirations to become a leading global manufacturing hub. But many components and stakeholders in the logistics and supply chain management ecosystem require their proactive involvement and initiatives to make the framework robust, and market-friendly.

A digital platform is a good starting point to recognise and align the various departments, and the rule book provisions. At the same time, the challenges are from within multiple quarters, especially the states that play an essential role in shaping policy implementation. The degree of digitisation and the approach to digitisation vary from state to state. The state governments have a mixed record on this front. How much the bureaucracy recognises the need for quick transportation in cargo movement is something that needs to be worked out on the ground, and cannot be resolved on a digital platform alone. One example could be that of RTOs — are they ready to facilitate the movements of cargo vehicles without their routine checks along the roadsides?

The unified logistics interface platform (ULIP) is projected to be the UPI moment in logistics. But, in the long run, can private sector companies develop their interface based on the ULIP? The role and the involvement of the market players could be channelised into the augmentation of India’s logistics ecosystem by helping them with easy-to-navigate state-level plugins on the ULIP. But it requires tremendous efforts to reform various policies interlinked to the logistics movements at the state level.

Though multimodal hubs are proposed, identifying suitable locations, building the industrial neighbourhood, and supporting them with warehouses and connectivity are essential steps. Market reforms such as farm laws, warehousing policy, etc. are vital lessons to be remembered in this context.

As the world is moving towards green logistics, India’s step to increase the interoperability and standardisation process to bring the entire logistics under one umbrella is a much-needed reform to catch up with the rest of the world regarding our logistics performance.

At the same time, many policy reforms and land-based infrastructures need to be addressed at a priority level to ensure the maximum efficiency envisaged on the digital platform as per the national logistics policy inaugurated.

D Dhanuraj is Chairman, and Anisree Suresh is Associate, Research & Client Management, Centre for Public Policy Research, Kochi. Views are personal, and do not represent the stand of this publication.
D Dhanuraj is Chairman, Centre for Public Policy Research, Kochi.
Anisree Suresh is Associate, Research & Client Management, Centre for Public Policy Research, Kochi. Views are personal, and do not represent the stand of this publication.
first published: Sep 20, 2022 05:51 pm
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