National Logistics Policy Overview
The Union government has been working on the National Logistics Policy for three years.
The Ministry of commerce released a draft logistics policy for consultation in 2019, but it was delayed by the Covid-19 pandemic.
The National Logistics Policy was once again announced by the Finance Minister in the Union Budget for 2022-23.
Why does India need a National Logistics Policy?
- Reducing logistics cost: Logistics costs in the country are as high as 14% of GDP while it is 8.14% of GDP in US. In the next five years, the NLP wants to reduce this to 8%.
- Export promotion: Improving this sector would facilitate a 10% decrease in indirect logistics cost leading to a growth of 5-8% in exports.
- Multiplier effect: Leading industries such as automotive components, pharmaceuticals, cement, textiles, FMCG and e-commerce depend hugely on warehousing and logistics.
- Need for organization and formalization in the sector: The logistics industry in India is highly fragmented with a large number of unorganized players. Only 10-15% of the sector is owned by organized players.
- Employment generation: The Indian logistics industry provides employment to more than 22 million people.
- Growth potential: According to ICRA, the sector has grown at a CAGR of 7.8% during the last five years and is expected to grow at 10.5% until 2025.
- To minimize agricultural wastage: India loses almost 16% of its agricultural output due to improper logistics and supply chain limitations.
National Logistics Policy 2022 Highlights
- Policy Implementation: The National Logistics Policy will be implemented through a Comprehensive Logistics Action Plan (CLAP). The interventions proposed under the CLAP are divided into eight key action areas:
- Multi-modal Integration:
- Diversification: NLP will facilitate a modal shift in logistics from the current over dependence on roads (over 60 per cent currently) to railways (30 per cent currently) and waterways (5 per cent currently).
- Synergy: The policy will attempt a synergy between flagship projects such as Sagarmala, Bharatmala and PM GatiShakti National Master Plan.
- Use of Technology and Digitization:
- Integration of Digital System (IDS) will integrate 30 different systems of seven different departments, such as customs, aviation, road transport, railways, international trade and commerce ministries.
- Unified Logistics Interface Platform (ULIP) aims to ensure continuous monitoring of cargo movement.
- Ease of Doing Business:
- Ease of Logistics (ELOG) Dashboard would seek to simplify procedures and achieve ease of doing business.
- System Improvement Group (SIG) would monitor all projects related to logistics in a regular basis and ensure the removal of hurdles faced in the sector.
- An empowered group of secretaries (EGoS) has been constituted under the PM Gati Shakti to monitor and review the implementation of the NLP.