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National Logistics policy to boost sectoral plans, push rail share

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NEW DELHI : India is drawing up a plan for easing logistics infrastructure for 15 sectors including cement, ste’el and fertilisers, that will detail the most efficient way of transporting these commodities.

The plan is in line with the National Logistics Policy to be launched by Prime Minister Shri Narendra Modi on Saturday.The idea is to carry out focussed interventions to ensure faster outcomes, officials said.

“There will be a lot of soft interventions enabled by the policy. Focus will be on monitoring outcomes of efforts and increasing coordination between the ministries responsible for improving logistics movement in the country,” a government official, aware of the contours of the proposed policy, said.

Arindam Guha, leader & partner, government and public services, Deloitte India, said a combination of additional infrastructure investments through the National Infrastructure Pipeline and prioritisation of projects through the Gati Shakti initiative would give thrust to the logistics efficiency.

The logistics policy will seek to ensure that more weight is thrown behind the existing PM Gati Shakti master plan, which is in early stages of being implemented. The plan also includes raising the share of railways in overall freight movement to 40% from around 28% now to bring down costs and increase efficiency.

In the current logistics modal mix, roads have around 60% share in freight movement, while the remaining share belongs to the water route. Efficient economies’ modal mix is 25-30% roads, 50-55% railway and 20-25% water, the commerce and industry ministry said in a draft policy in 2020.

“As the Dedicated Freight Corridor comes up, along with the thrust given by the logistics policy, we expect the share of railways to increase to 40% from around 28-29% now,” said another official.

A large emphasis will be on multi-modal logistic parks that will be centred on seamless movement of goods and people across modes of transport.

The national and state master plans would help identify optimal multimodal transport mix to decongest roads by promoting railways, inland waterways and coastal shipping.

“The NLP is expected to facilitate a change in the modal mix to focus more on railways (target share of over 50%) and waterways (over 20%),” the official said. The Department for Promotion of Industry and Internal Trade (DPIIT) has also begun discussions to assess the cost of logistics in the country.

The government has so far been relying on global studies which peg the cost at around 13-14% of the GDP. The policy seeks to bring down this cost to 8%. Transportation costs are aimed to be reduced to 4% by 2030 from 6% now and those related to warehousing to 2.5% from 3.5% now, according to officials.

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