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What to expect from National Logistics Policy unveiled by PM Modi?

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NEW DELHI : Prime Minister Shri Narendra Modi launched the National Logistics Policy (NLP) on his 72nd birthday, aiming at seamless transportation of goods with enhancement in industrial competitiveness. The policy is likely to concentrate on multi-modal transport, digitisation, and re-engineering. “The need for a national logistics policy was felt since the logistics cost in India is high as compared to other developed economies. It is imperative to reduce the logistics cost in India for improving the competitiveness of Indian goods both in domestic as well as export markets,” stated an official statement. Logistics are one of the main components in the domestic and international markets. Whenever there is manufacturing, transportation is needed. And transportation needs logistics such as container ships, trains, trucks, etc.

The policy is expected to make a robust system to address supply constraints and streamline regulations. It is also a roadmap for lowering fuel costs which will result in reduced logistics costs.

What is the policy?

The Union government is working on the policy for three years. In 2019, a draft of the policy was released by the Ministry of Commerce but it got delayed pertaining to the COVID-19 pandemic.

With this policy, the sector can anticipate logistics cost-cutting, which is 15 per cent of India’s GDP, to 8 per cent in the next five years.

Cost cutting will eventually encourage value upgradation and efficiency across sectors. The policy is said to have a way to acknowledge and lay down a cross-sectoral, multi-jurisdictional, and interdisciplinary framework for the development of the logistics ecosystem.

At present, India is highly dependent on road transport for cargo transport. This policy is expected to turn the current system towards a mix of rail, shipping, road, and air transport. There are works in progress on the Bharatmala, Sagarmala, and Inland Waterways projects where the government is preparing an infrastructural base. This policy is to interlink and bridge the gaps between different segments. This policy will complement the Gati Shakti programme that was launched earlier.

There are four major steps with which this policy is looking as improving Indian logistics networks on par with global standards.

Four focus areas

According to the reports, the policy will focus on four main steps.

  • Integration of Digital System (IDS): This network will integrate 30 distinct systems from seven different departments such as road, transport, railway, foreign trade, commerce ministries, and aviation. It will automatically shorten the cargo movement.
  • Unified Logistics Interface Platform (ULIP): It is to monitor seamless movements of cargo.
  • Ease of Logistics (ELOG): By easing and simplifying rules, the new policy will smoothen the basic business.
  • System Improvement Group (SIG): This step will keep an eye on entire logistics projects and remove any obstacles faced by them

The policy will be implemented and reviewed by an Empowered Group of Secretaries, constituted under the PM Gati Shakti.

Participation among states and ministries

As per the policy, every state in the country will set up a State Logistics Coordination Cell or Committee and through the Logistics East Across Different States (LEADS) index, their performance will be reviewed annually.

As per the data of the Commerce Ministry, the logistics sector is a complex network of more than 20 government agencies, 500 certifications, over 10,000 commodities, 200 shipping agencies, 129 Inland Container Depots, 168 Container Freight Stations, banks, and insurance agencies among others.

This sector provides livelihood to over 22 million people and is a market size of $200 billion. This policy, which is expected to improve the system, will decrease the indirect logistics cost by 10 per cent. It will grow the exports by 5-8 per cent, as per the ministry.

The National Logistics Policy will promote the use of artificial intelligence, digitised methods, and interlinking of numerous stakeholders, transport agencies, ministries, and state governments.

The NLP will constitute a Network Planning Group (NPG) and a Service Improvement Group (SIG) to enhance coordination among various ministries.

While the NPG has heads of 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, the SIG will have all the members of NPG along with the 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.

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