The foundation of any developed economy is the free flow of people, goods, and services. The government is aware that India cannot aim to become an economic superpower by 2047 without a strong logistics foundation. India, the fifth-largest economy in the world and a rising centre for manufacturing needs a policy that boosts its ability to compete internationally, creates more jobs, performs better in international rankings, and paves the path for India to develop into a logistics hub.
So, on Saturday, 17th September 2022, Prime Minister Narendra Modi announced the National Logistics Policy a year after announcing the Gati Shakti programme for the holistic, integrated development of the nation's infrastructure. Launched on the same day as the reintroduction of cheetahs in India, the PM referred to the event by saying, “the baggage should move as quickly as a cheetah.” And to achieve this, the National Logistics Policy must be put in place.
The Need For A National Logistics Policy
According to some private agencies, India's logistics make up 13% to 14% of India’s GDP which is expensive compared to other affluent nations. India's competitiveness is hampered by high logistics costs which in turn is frequently held responsible for the country's declining export competitiveness. It was ranked 44th in the World Bank's Logistics Performance Index in 2018, according to the latest available report. Poor logistics not only raises the costs of international and domestic trade but also results in the loss of goods, particularly perishable ones.
This policy will work towards developing an efficient and cost-effective logistics system that is required for India's transition from a developing to a developed economy. A logistics system of this calibre will not only result in a thriving local economy but will enable Indian goods to compete in the highly competitive international market.
Well, India has an insufficient and ill-equipped infrastructure. Despite having the world's second-largest road network, national highways account for less than 2.7 percent of the total network. India's unbalanced logistics model mix raises transportation costs even further. Despite deteriorating transportation infrastructure, India is heavily reliant on its road networks. Its rail and sea networks continue to be underutilised.
But What Is India’s National Logistics Policy 2022 And Its Objective?
The National Logistics Policy was developed to make the Indian logistics sector a key driver of economic growth. This will be accomplished by improving and expanding the collaboration of businesses, government agencies, and society as a whole.
It is a comprehensive attempt to address high logistics costs with an interdisciplinary framework for the development of the country’s logistics sector. The new policy is guided by the aim “To establish a technologically enabled, integrated, cost-efficient, resilient, sustainable and trusted logistics ecosystem in the country for fast and inclusive growth.”
It will target to lower the logistics expenses by around 5 percentage points of GDP. A 10% decrease in indirect logistics costs is expected to lead to 5-6% incremental growth in exports. It will also aid in the creation of data-driven solutions that enables decision-making for a better logistical setting.
The policy has 4 pillars to make the logistics sector at par with global standards:
1. Integration Of Digital Systems
Under IDS, 30 different systems of seven departments will be integrated; these include data from the road transport, railway, customs, aviation and commerce departments.
2. Unified Logistics Interface Portal
This will allow for faster and smoother cargo movement as well as the confidential exchange of information in real-time.
3. Ease Of Logistics (ELOGS)
Transparency and accessibility will enable and ensure the ease of logistics business.
4. Setting Up A System Improvement Group (SIG)
This system will keep a close eye on all logistics-related projects and remove any bottlenecks.
Conclusion
The National Logistics Policy will enable a unified policy and regulatory environment for end-to-end logistics services as well as a broad institutional structure to control the logistics sector and raise its level of competitiveness. Both the state and federal governments would create a logistics master plan that would include projects planned by various ministries to ensure multi-modality, optimal modal mix, and first and last-mile connectivity.