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National Logistics Policy accelerates India towards economic efficiency

BusinessNational Logistics Policy accelerates India towards economic efficiency

India on track with task force to assess logistics cost, unified logistics platform with over 614 industry players registered

New Delhi

India may still be trying to decode the economy of time and cost achieved in facilitating the movement of goods and services across various industries but the National Logistics Policy is gaining significant traction in achieving the targeted reduction in cost of logistics, improving the Logistics Performance Index (LPI) ranking at the core of which is the endeavour is to be among top 25 countries by 2030, as well as creating data driven decision support mechanism for an efficient logistics ecosystem.

India’s adrenalin rush to develop a technologically enabled, integrated, cost effective and resilient logistics network to drive economic growth and business competitiveness in the country, is also driven by the urgent need to fill the lacunae of a Logistics Cost Framework. The DPIIT has initiated an endeavour to estimate logistics cost, since no official estimates are available and they vary from 8-14 percent of GDP. In the past private reports by Armstrong & Armstrong and NCAER have estimated cost to be 13 percent of GDP while NCAER in 2018 pegged it at 8 to 10 percent of GDP. Hence a need was felt for developing accurate estimates based on holistic data and relevant statistical models.

A year after the National Logistics Policy (NLP) was launched on 17 September, 2022 by Prime Minister Narendra Modi to complement PM GatiShakti National Master Plan (NMP), the NLP has started leveraging the best in class technology, processes and skilled manpower to reduce logistics cost and improve performance. A task force with members including senior officials from concerned line ministries and experts from academia, industry and think tanks, notified in March 2023 is now at work to develop a long-term survey-based framework for logistics cost calculation using secondary data available in public domain baseline estimates for logistics cost achieved. The long-term survey-based study will help in arriving at robust logistics cost estimates at a disaggregated level so that targeted interventions across sectors / modes can be undertaken.

The NLP comes in a perfect alibi for the GatiShakti NMP which tackles the integrated development of the fixed infrastructure and network planning while NLP addresses the soft infrastructure and logistics sector development aspect. At the heart of the NLP is the Comprehensive Logistics Action Plan (CLAP) which is being deployed to achieve these targets through eight action areas including integrated digital logistics systems, standardisation of physical assets and benchmarking of service quality standards, logistics human resource development and capacity building. The other pillars are state engagement, exim logistics and services improvement framework, sectoral plans for efficient logistics (SPEL) for addressing sector-specific needs in the logistics sector and streamlining movement of bulk and break-bulk cargo in the country, Sectoral Plans for Efficient Logistics (SPEL) and facilitation of development of logistics parks.

The progress is impressive. The E-LoGs portal which is a digital system for registering logistics related issues by logistics sector associations, has on date, 29 logistics sector associations registered on the portal, with a total 71 issues, of which 34 issues have been resolved. The implementation of the CLAP is picking up speed with the launch of a Unified Logistics Interface Platform (ULIP), an indigenous data-based platform for digital integration in logistics sector which integrates 34 logistics-related digital systems /portals across ministries/departments and provides single sign to users who are trading goods and using multiple modes of transport. Even GST data is also being integrated with ULIP.

The ULIP is also providing opportunities to the private sector to develop use cases on the portal with Non-Disclosure Agreements (NDAs). After due diligence, data on ULIP can be accessed through API integration. Over 614 industry players have registered on ULIP, 106 private companies have signed NDAs, 142 companies have submitted 382 use cases to be hosted on ULIP and 57 applications have gone live.
Under a comprehensive port connectivity plan to address last and first mile infra gaps and promote seamless movement of goods to ports, 60 projects of road transport and highways (MORTH) and 47 of Railways have been sanctioned to improve last mile connectivity to ports. On addressing the SPEL, a comprehensive port connectivity plan (CPCP) to bridge last mile gaps to ports, has been developed by the Ministry of Port, Shipping and Waterways. Till date 107 port connectivity projects (47 of MoR and 60 of MoRTH) have been notified. The plan on State Engagement has picked up pace with States/UTs developing State Logistics Plans (SLPs) aligned with NLP to bring holistic focus on logistics in public policy. So far, 22 States have notified their respective State Logistics policies.

To improve the LPI with focus on achieving a rank among top 25 countries by 2030, DPIIT is working with the World Bank team, including Secretary DPIIT’s meeting with senior officials of WB group at their headquarter in Washington DC to apprise them about the several initiatives and reforms of the Government and draw their attention on need for greater emphasis on objective based methodology for LPI scoring. A dedicated unit is being set up within the Logistics Division to develop and implement an action plan for improving India’s LPI ranking and concerned line Ministries are setting up a dedicated cell for a focused project-based approach to improving India’s performance across the LPI parameters.

As part of the state engagement pillar, a slew of the regional conferences and inter-Ministerial meetings are being pushed in by the DPIIT to facilitate implementation of the NLP and give it wide ambit. The most recent is an inter-ministerial meeting on 28 July, 2023, on completion of 10 months of the launch of NLP involving 11 infrastructure and key ministries and showcasing of measures to improve logistics efficiency in the country by Ministries of road transport and highways, port shipping and waterways, coal, food and public distribution, civil aviation, steel, commerce, fertiliser, revenue, skill development and entrepreneurship, power. The National Industrial Corridor Development Corporation Limited (NICDC) was also involved.
There is also fast-tracking on the approved institutional mechanism for the NLP, namely, a Services Improvement Group (SIG) which has been constituted on 14 March, 2023 with representatives from infrastructure ministries, NITI Aayog, Department of Revenue and Department of Commerce to facilitate interoperability; eliminate fragmentation in documentation, formats, processes, liability regimes and reduce gaps in regulatory architecture. Till date, six meetings of SIG, along with industry associations have been held.
An indigenous logistics performance index on lines of the World Bank’s LPI, called ‘Logistics Ease Across Different States (LEADS)’ index for logistics performance monitoring across states has been developed to enhance Logistics Ease Across Different States (LEADS). The LEADS 2023 report will be unveiled soon.

According to Grant Thornton Bharat experts, the evolving landscape of logistics in India comes opportunely as India looks to become the third-largest economy by 2027. The NLP is well suited to India and opportunely, the report suggests, currently when the global demand outlook is favourable, presenting Indian businesses with the opportunity to enhance supply-side indicators and compete on a global scale. The manufacturing sector, contributing approximately 17 percent to the GDP, is expected to play an even more substantial role in the future, the report notes. However, the increase in production will create additional strain on logistics infrastructure, demanding enhanced efficiency and availability to maintain competitive logistics costs. The logistics sector is already growing steadily at a rate of 10–12 per cent YoY, contributing 14.4 per cent to India’s GDP.

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