On September 17, 2022, the Prime Minister (PM) of India, Narendra Modi launched the National Logistics Policy (NLP) at Vigyan Bhawan, New Delhi (Delhi) that will act as a single point of reference for all logistics and trade facilitation matters.
- The NLP, in conjunction with the PM-Gati Shakti Programme, Sagarmala and Bharatmala (waterways and roadways) schemes, the Dedicated Freight Corridors, etc., can be transformational.
- The draft NLP was released in 2019 but it was delayed by the Covid-19 pandemic. Then again in the Union Budget of 2022-23, it was announced by the Union Minister Nirmala Sitharaman, Ministry of Finance.
Who has formulated the Policy?
Logistics Division, Department of Commerce, Ministry of Commerce and Industry (MoCI)
Aim behind Policy:
i.To promote seamless movement of goods across India
ii.To competitiveness of Indian goods in domestic and global markets
India’s Logistic Sector: Current Scenario
i.Currently, Indian logistics market is over $200 billion. It has over 20 government agencies, 40 Partner Government Agencies, 37 export promotion councils, 500 certifications, more than 10,000 commodities and a $160-billion market.
ii.It also involves 200 shipping agencies, 36 logistics services, 129 ICDs (Inland Container Depots), 168 CFSs (Container Freight Stations), 50 IT ecosystems, banks and insurance agencies.
iii.India spends around 13 to 14% of the GDP (Gross Domestic Product) on logistics costs
Policy Targets:
The policy transformational targets to help benchmark its performance. It includes the following:
i.Reducing the cost of logistics from 14-18% of GDP to global best practices of 8% by 2030. It also targets to reduce logistics cost to 10% of GDP over the next 5 years.
- The United States (US), South Korea, Singapore, and certain European nations have low logistics cost-to-GDP ratio.
ii.Improving India’s Logistics Performance Index (LPI) ranking to be among top 25 countries by 2030 from 44 in 2018.
iii.Creating data-driven Decision Support Systems (DSS) to enable an efficient logistics ecosystem.
iv.Minimization of logistical issues, exports growth, and to benefit small industries and their working personnel.
Reason behind this NLP:
As mentioned above, the logistics cost in India is high. This policy is the first step in reducing logistics costs to single digits in India. Efficiency in logistics will also increase India’s exports, boost domestic manufacturing and make India a more attractive destination for global investors.
- Some states such as Andhra Pradesh (AP), Assam, Chhattisgarh, Gujarat, Haryana, Himachal Pradesh (HP), Kerala, Madhya Pradesh, Maharashtra, Manipur, Mizoram, Rajasthan, Telangana and Uttar Pradesh (UP) have already formed their logistics policy. Logistics policies of 13 states are still in the draft stage.
Introduction of Integrated Digital System (IDS):
Under this policy, the Government will introduce Integrated Digital System (IDS) that will integrate 30 systems belonging to ministries of road transport, railways, customs, aviation, foreign trade, and commerce for faster, cheaper and safer logistics services.
- All these departments have their own digital data which will be integrated under IDS. This will help smooth cargo movement.
Key Points:
i.The focus areas of NLP is re-engineering, digitization, and multi-modal transport.
- It will streamline rules, address supply-side constraints, and provides a roadmap to reduce fuel costs, among others.
ii.The policy also makes way for a framework to set up Multi-modal Logistics Parks (MMLPs), which will be adopted by states and central ministries, and promote seamless transportation of goods.
iii.This policy will ensure quick last mile delivery, end transport-related challenges, save time and money of the manufacturers, prevent wastage of the agro-products.
Central Government efforts to improve Connectivity:
i.To improve connectivity, the government has been doing systemic infrastructure development through schemes such as Sagarmala, Bharatmala, Dedicated Freight Corridor.
ii.The total capacity of Indian ports has increased significantly and the average turn-around time of container vessels has come down from 44 hours to 26 hours.
iii.Utilization of technology is also strengthening the logistic sector like e-Sanchit which enables paperless export-import trade processes, e-way bill, and FASTag, etc.
iv.Strengthening the logistics sector will not only make it easier to do business, but also to generate substantial employment and ensure improvement in wages and working
Other Launches:
i.The PM also launched the Unified Logistics Interface Platform (ULIP) that will bring all the digital services related to the transportation sector into a single portal,
ii.A new digital platform, Ease of logistics Services or E-Log has also been launched through which industry associations can take up any issues regarding operations and performance with the government.
Recent Related News:
i.The Directorate General of Foreign Trade (DGFT), MoCI has introduced the Paper Import Monitoring System (PIMS) by amending the import policy of major paper products from ‘Free’ to ‘Free subject to compulsory registration under PIMS’.
ii.According to MoCI data, India recorded all-time high exports worth USD 7.76 billion with the volume of 13,69,264 MT of seafood in FY 2021-22, despite the several challenges in its major export markets caused by the Covid-19 pandemic.
About Ministry of Commerce and Industry (MoCI):
Union Minister– Piyush Goyal (Rajya Sabha Maharashtra)
Ministers of State– Anupriya Patel (Mirzapur, Uttar Pradesh) ; Som Parkash (Hoshiarpur, Punjab)
