To give a fillip to the country’s logistics sector, Prime Minister Narendra Modi on Saturday unveiled the National Logistics Policy (NLP) in what’s billed as the country’s first holistic approach for the $200 billion sector.
The new policy, first introduced in the Budget 2020 speech by Finance Minister Nirmala Sitharaman, is being unveiled on Modi’s birthday. The new policy will bring in an integrated and tech enabled approach to logistics operations to bridge the efficiency gap.
“We are the world’s 5th largest economy. India is setting new targets for exports and we have been able to achieve those targets. India is emerging as a global manufacturing hub and the world has started recognising that fact. NLP will provide a fresh impetus to it,” said Modi.
He added the policy is the stepping stone performance is the key. “Policy plus performance is equal to growth. Policy can be driving and guiding force and NLP should not be seen only as document. NLP is a culmination of 8 years of effort,” said Modi.
Modi added that turnaround of container vessels at ports has been reduced from 44 hours to 26 hours. New eco-friendly waterways are being setup, 40 air cargo terminals have been setup to facilitate exports, 30 airports have cold storage facilities, and 35 multi modal logistics facilities are being setup.
He highlighted that GST has reduced paperwork for movement of goods across states. Drone transportation, he said, is also likely to emerge as a significant logistics mode. “We already have a progressive drone policy,” Modi said.
According to the PM, India has to bring down the logistics cost of 13-14% of GDP to single digits. “It is a low-hanging fruit to be globally competitive,” said Modi.
“NLP will work as a double engine of working along PM Gati Shakti. With its implementation cost will reduce, international trade will expand and startups will see new avenues,” said Commerce & Industry Minister Piyush Goyal at the launch.
One of its key objectives would be to make Indian logistics competitive in terms of global standards. Some key thrusts include, IDS — Integration of Digital System, ULIP — Unified Logistics interface Platform, ELOG — Ease of Logistics, and SIG — System Improvement Group. An e-Handbook has also been launched for the standardization of the warehousing sector. New courses in management around Logistics and Supply Chain is also envisaged.
According to the (latest available) World Bank Logistics Index of 2018, India is ranked 44th in logistics costs, lagging countries like China and Vietnam, which are at the 26th and 39th positions, respectively. The logistics cost in India is estimated at 13-14% of GDP, compared to 7-8% in developed economies.
As per an Arthur D. Little-CII report, higher logistics cost is leading to a competitiveness gap of $180 billion for India, and this gap is likely to go up to $500 billion by 2030. Experts highlight the high logistics costs can be attributed to an unfavourable policy regime, and an under leveraged multimodal transport system heavily skewed in favour of road transport.
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