12 much needed transformations that National Logistics Policy will unfold
• An effective and efficient logistics ecosystem is one of the drivers of the Indian economy.
• In spite of this knowledge, logistics cost in India, estimated at 13-14% of GDP, is very high compared with more efficient global economies and the sector continues to be highly unorganized.
• In this kind of a scenario, the National Logistics Policy gains salience as it will enable in creating a single point of reference for all logistics and trade facilitation matters in the country.
• The policy will provide an impetus to India’s industrial competitiveness and hence have a positive impact on exports.
We all know that an effective and efficient logistics ecosystem can be a key contributor to robust economic growth in the country, as this sector is one of the most important accelerators of trade in the country. Specifically, an efficient supply chain network has the potential to increase farmers’ incomes manifold, which can lead to a domino effect on the overall economy.
Despite the recognition of logistics being a critical driver of economic development, logistics cost in India, estimated at 13-14% of GDP, are very high (US 9-10%, Europe 10%, Japan 11%) compared with more efficient global environments, and the sector continues to be highly unorganized. India also has a skewed modal transportation mix, with 60% of freight moving on roads, which is significantly larger than in key developed economies.
The following are some of the changes that National Logistics Policy will bring:
- It will enable creating a single point of reference for all logistics and trade facilitation matters in the country, which will also function as a knowledge and information sharing platform.
- It will also help in driving logistics cost as a percentage of GDP down from estimated current levels of 13-14% to 10% in line with best-in-class global standards and incentivise the sector to become more efficient by promoting integrated development of logistics.
- Further, it will optimize the current modal mix (road-60%, rail-31%, water-9%) in line with international benchmarks(25-30% share of road, 50-55% share of railways, 20-25% share of waterways) and promote development of multi modal infrastructure.
- The policy will also go a long way in improving first mile and last mile connectivity to expand market access of farmers, MSMEs and small businesses.
- It will also provide a strong impetus to the MSME sector in the country through a cost-effective logistics network.
- The policy will ensure standardization in logistics (warehousing, packaging, 3PL players, freight forwarders), creating a National Logistics e-marketplace as a one stop marketplace.
- It will involve simplification of documentation for exports/imports and drive transparency through digitization of processes involving Customs, PGAs etc in regulatory, certification and compliance services.
- It will also entail the creation of a data and analytics center to drive transparency and continuous monitoring of key logistics metrics.
- It will at the same time, provide an impetus to trade and hence economic growth by driving competitiveness in exports and double employment in the logistics sector by generating additional 10-15 million jobs and focus on enhancing skills in the sector and encouraging gender diversity.
- Further, it will lead to the strengthening the warehousing sector in India by improving the quality of storage infrastructure including specialized warehouses across the country and promoting cross regional trade on e-commerce platforms by enabling a seamless flow of goods.
- The policy will create a single window logistics e-marketplace – A National Logistics e-marketplace, which will be set up by the Logistics Wing, as a one-stop marketplace. It will be a single window transactional platform. This single window portal will onboard various logistics service providers like transporters, warehousing providers, shipping lines, 3rd party service providers, freight forwarders, customs brokers etc and various government agencies including Customs, Partner Government Agencies (PGAs) etc. involved in regulatory, certification and compliance services. Along with this, the policy also envisages to set up a Logistics Data and Analytics Center.
- The policy will be creating a Center of Trade Facilitation and Logistics Excellence (CTFL) and leverage expertise of multilateral agencies. This center will ideate and identify intervention areas critical for streamlining logistics in the country and to drive innovation in the logistics sector. The CTFL will also focus on identifying global best practices in logistics, and adapt the same to India’s context.