National Logistics Policy 2022
The entire procedure of acquiring, storing, and delivering resources to their intended location is referred to as “logistics“. Among other things, it includes stock, tools, people, and raw materials. The National Logistics Policy was created to improve integration and cooperation between corporate entities, governmental organisations, and society at large in order to turn the Indian logistics industry into a significant driver of economic growth. The NLP strives to establish a thriving logistics ecosystem that encompasses all participants from many industries, including business, manufacturing, services, and agriculture. The NLP also offers a framework for supporting improved movement of commodities through contemporary transportation infrastructure across all modes of transportation, including roads, trains, waterways, etc., along with increasing the quality of traffic control systems. The goal of the strategy is to give multimodal connectivity infrastructure to various economic zones in addition to PM Modi’s Gati Shakti-National Master Plan, which was introduced in 2021. About eight years it took to develop NLP. Changes in policy and significant decisions are being taken to speed up last-mile delivery, put an end to transportation-related problems, save manufacturers time and money, and prevent the loss of agricultural products. Sector speed, value generation, and entrepreneurship will all increase when coordination is improved.
Inaugurating the eagerly expected National Logistics Policy was Indian Prime Minister Narendra Modi on September 17, 2022. By offering a framework for creating a sustainable and successful logistics business, it seeks to accelerate the transformation of the Indian logistics industry. After expanding at a CAGR of 7.8 percent over the previous five years, Investment Information and Credit Rating Agency of India Limited (ICRA) predicts that the industry will expand at a CAGR of 10.5 percent through 2025. In India, this industry employs more than 22 million people, and it is predicted that through skill development, it would expand at a rate of 5% over the next five years. Recently, the government announced the National Logistics Policy (NLP) 2022, with the goal of achieving “rapid last-mile delivery” and resolving transportation-related issues.
The Four Key Actions for National Logistics Policy (NLP):
- Integration of Digital System (IDS): Systems from seven distinct departments will be digitally integrated (like road transport, railways, aviation, commerce ministries and foreign trade). The IDS integrates 30 distinct systems from these seven agencies.
- Platform for Unified Logistics Interface (ULIP): This guarantees quicker and more seamless cargo transportation and makes it possible for confidential real-time information exchange. This Logistics Data Bank Project of the National Industrial Corridor Development Corporation (NICDC) has been leveraged.
- Ease of Logistics (ELOG): It will promote and guarantee the business’s ease of logistics through openness and accessibility.
- Group for System Improvement: It will routinely keep an eye on all logistics-related initiatives.
Need of National Logistics Policy:
- According to the Economic Survey 2017–18, more than 22 million people in India depend on the logistics industry for their livelihood. By upgrading the sector, 10% less money would be spent on indirect logistics, which will boost exports by 5 to 8%.
- A national logistics policy was deemed necessary because India has higher logistics costs than other industrialized nations.
- Furthermore, according to the survey, the Indian logistics sector will be valued approximately USD 215 billion in the next two years as opposed to roughly USD 160 billion at the moment.
- Cost-effective logistics boost productivity in a variety of economic areas, encouraging value creation and entrepreneurship.
- India’s logistics industry is highly fragmented, and by 2022, it is intended to lower the cost of logistics from its current 14% of GDP to less than 10%.
- By 2030, raise the nation’s Logistics Performance Index (LPI) rating to one of the top 25.
- To enable a productive logistics environment, develop data-driven decision support systems (DSS).
Objectives of National Logistics Policy:
- Establishing a one-stop online market for national logistics. It will simplify export/import documentation and promote transparency by digitizing procedures involving Customs, PGAs, and other parties in regulatory, certification, and compliance services.
- Establishing a center for data and analytics to promote openness and ongoing observation of important logistics metrics.
- Encouraging collaboration between business, academia, and the government to establish a center of excellence for logistics and foster innovation in the industry.
- Developing and maintaining a master plan for all logistics-related development, known as an Integrated National Logistics Action Plan.
- Encouraging commerce and hence economic growth by enhancing export competitiveness.
- Creating an additional 10–15 million jobs to double the sector’s employment while concentrating on improving skills and promoting gender diversity.
- India’s position in the Logistics Performance Index should rise to between 25 and 30.
- Strengthening the warehousing industry in India by raising the standard of storage facilities nationwide, including specialist warehouses.
- Using efficient agri-logistics to cut agri-wastage losses to less than 5%.
- Creating a cost-effective logistics network to support the country’s MSME sector = Enabling a smooth flow of goods to support cross-regional trading on e-commerce platforms.
- Promoting the country’s adoption of green logistics Policy thrust areas.
Challenges of National Logistics Policy:
- India wants to have a $5 trillion economy, and the logistics industry will be a key enabler in making this happen. Although the Indian logistics industry contributes 14.4 percent of the GDP to the nation, it costs the economy 14 percent of GDP, compared to the global average of about 8 percent. As a result, there is a staggering $180 billion competitiveness deficit annually.
- One of the appropriate methods to go about it is the Gati Shakti program, which was introduced last year for multi-modal connection. However, the long-discussed National Logistics Policy (NLP) needs to be put into action right now in order to reduce supply chain bottlenecks and hasten the creation of an integrated logistics ecosystem.
- If the logistics cost is to be cut in half to international standards, the train sector must quickly address numerous structural flaws. The average freight train speed, which has been locked at 25 kmph for decades, must be increased to 50 kmph immediately. The railways require a timetable-based goods operation. To get access to the high-value small-load market, it must transform into an aggregator of freight at the source and a dis aggregator at the destination (as against rake-load goods).
Other Initiatives of Government National Logistics Policy:
- Gati Shakti: The Pradhan Mantri Gati Shakti (PMGS) scheme, India’s first national infrastructure master-plan. It aims to break down inter-ministerial silos and consolidate the planning of infrastructure projects. The sector as a whole is covered, regulations are simplified, and supply-side constraints are addressed. The Policy will support the industry’s transformation into a cohesive, financially viable, resilient, and sustainable logistics ecosystem across the country. The logistics and transportation industries have become more efficient as a result of the adoption of GST. Over 20% less time is now required for truck turnaround. The logistics industry is becoming more efficient thanks to FASTag, faceless customs assessments, and electronic waybills.
- Bharatmala Project: It is a Road and Highways project of the Government of India that is centrally sponsored and supported. The initiative intends to connect new regions to the NH network and close the network’s infrastructure gaps. By establishing backward connections for seeds through women’s self-help organisations, the Village Storage Scheme will lower the cost of logistics. This will be accomplished with the aid of MUDRA loans and NABARD funding. Additionally, there are programs like the Bharatmala Yojana, specialized freight lanes, the development of waterways, and multi-modal transportation hubs.
- Sagarmala Initiative: It is an ambitious national program that aims to maximize the potential of India’s waterways and coastline in order to significantly improve the performance of the logistics sector in that country. The goal of this government-led project is to improve the efficiency of India’s logistics industry. In order to reduce the amount of infrastructure that must be built in order to achieve these goals, the concept envisions utilizing the potential of waterways and the shoreline. Also it is to support port-led direct and indirect growth and to provide the infrastructure needed to move cargo swiftly, cheaply, and efficiently to and from ports.
The National Logistics Policy has enormous potential for infrastructural development, for company growth, and for expanding employment possibilities. The logistics industry has grown stronger as a result of technological use. The National Logistics Policy will revitalize all industries. The administration has prioritized increasing both the ease of doing business and the ease of living since 2014. Another step in this direction is the National Logistics Policy, a comprehensive initiative to address problems of high cost and inefficiency by establishing an overarching interdisciplinary, cross-sectoral, and multi-jurisdictional framework for the growth of the entire logistics ecosystem. Its enhancement can guarantee a 10% reduction in indirect logistics costs and a 5–8% boost in the growth of exports.
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