How National Logistic Policy Will Be A Game Changer For the Indian Economy
What is National Logistics Policy?
National Logistics Policy is a holistic framework for integrating various logistics activities and stakeholders in the country to enable the flow of goods and services seamlessly and at optimum cost.
What are the objectives of the National Logistics Policy?
The main objectives of the National Logistics Policy are to:
– Make logistics an integral part of the country’s economic and development planning
– Create a National Logistics Portal for providing information on logistics services, infrastructure and officers
– Encourage private sector participation in the development of logistics infrastructure
– Improve coordination between various ministries/departments and other stakeholders involved in logistics
– Promote the use of technology in the logistics sector
– Encourage the setting up of Logistics Parks and Hubs
How will National Logistics Policy be a game changer for the Indian Economy?
The National Logistics Policy (NLP) is a game changer for the Indian economy as it aims to reduce the cost of logistics by 10%. This will boost the economy as logistics account for 14% of the country’s GDP. The NLP will also create a more efficient and integrated logistics system in the country.
Improved infrastructure
The first and foremost impact of the National Logistics Policy would be on the infrastructure of the country. The government has recognised that infrastructure is a key bottleneck for logistics in India. The policy has, therefore, proposed a series of measures to improve infrastructure, including:
-Setting up a National Logistics Portal to provide a one-stop shop for information on logistics services
-Improving last mile connectivity through initiatives such as the development of multi-modal transport hubs and inland waterways
-Developing a dedicated freight corridor between Delhi and Mumbai
-Augmenting capacity at major ports through initiatives such as the development of captive jetties
All these measures are expected to have a positive impact on the efficiency of logistics operations in India and lead to reduced costs for businesses.
Improved connectivity
The National Logistics Policy (NLP) was unveiled by the government on September 21, 2022, with the aim of reducing logistics costs as a percentage of GDP from the current 14% to less than 10%. The policy aims to do this by improving connectivity, reducing transaction costs and optimising infrastructure.
One of the key components of the NLP is improving connectivity, both within India and with neighbouring countries. Inland waterways are being developed and upgraded, new rail lines are being built and existing ones upgraded, and a network of expressways is being created. This will not only reduce travel time and costs but also ease congestion on the roads.
Inland waterways are being developed and upgraded
New rail lines are being built
Existing rail lines are being upgraded
A network of expressways is being created
Improved efficiency
One of the most important goals of the National Logistics Policy is to improve the efficiency of India’s logistics sector. This will be achieved through a number of measures, including the development of a National Logistics Portal and the establishment of a National Logistics Database.
The National Logistics Portal will provide single-window access to information on logistics services and infrastructure in India. This will make it easier for businesses to find the best providers of logistics services and compare prices.
The National Logistics Database will provide detailed information on the transportation infrastructure in India, including roads, railways, ports, and airports. This will help businesses to identify bottlenecks in the transportation system and plan their logistics operations accordingly.
The improved efficiency of India’s logistics sector is expected to lead to significant cost savings for businesses. This, in turn, is expected to boost economic growth and create new jobs.
What are the challenges in implementing National Logistics Policy?
The National Logistics Policy (NLP) was released by the Ministry of Commerce and Industry under the able guidance of Prime Minister Mr Narendra Modi on September 21, 2022. The policy has been drafted with the aim to address the various challenges faced by the logistics sector in India. The policy also seeks to provide a fillip to the Make in India initiative by reducing the cost of logistics and transportation.
Lack of awareness
One of the main challenges in implementing the National Logistics Policy is the lack of awareness about the policy itself. There is a need to create awareness among all the stakeholders, including businesses, logistics service providers, and policy-makers.
Lack of coordination
The lack of coordination and cooperation between the various stakeholders is a big challenge in the implementation of the National Logistics Policy. The various stakeholders include transport providers, regulatory bodies, logistics service providers, goods and service tax (GST) authorities, etc. There is a need to develop a common platform where all these stakeholders can connect and work together to ensure the successful implementation of the policy.
Another challenge lies in the fact that there is no single body or ministry that is responsible for the implementation of the policy. The policy has been formulated by a group of ministries, which includes the Ministry of Commerce and Industry, Ministry of Road Transport and Highways, Ministry of Railways, etc. This makes it difficult to monitor and track the progress of the policy.
Another challenge is that the policy does not have any specific targets or timelines for its implementation. This makes it difficult to measure the success of the policy.
The National Logistics Policy is a welcome step in improving the efficiency of logistics in India. However, its successful implementation will depend on how well the various challenges are addressed.
Lack of standardization
A major challenge in implementing the National Logistics Policy is the lack of standardization in the logistics industry. This is due to the fragmented nature of the industry, with a large number of small and medium enterprises (SMEs) operating in the sector. This makes it difficult to develop and implement industry-wide standards and practices.
Another challenge is the lack of trained personnel in the logistics sector. This is due to the fact that most logistics companies in India are family-owned businesses that have been passed down from generation to generation. As a result, there is a lack of formal training and education programs for employees in the logistics industry.
The third challenge is the infrastructure constraints faced by logistics companies in India. Poor infrastructure results in high transportation costs, which make Indian products uncompetitive in global markets. In addition, poor infrastructure makes it difficult for logistics companies to expand their operations and reach new markets.
The fourth challenge is the regulatory environment in India. The regulatory environment for logistics companies is complex and often contradictory. This makes it difficult for logistics companies to comply with all the regulations, and yet remain competitive.
The fifth challenge faced by logistics companies in India is security concerns. The recent terrorist attacks in Mumbai and Delhi have made many Indian companies reluctant to use Indian ports and airports for their shipments. As a result, many Indian companies are using other countries’ ports and airports for their shipments, which increases transportation costs.
National Logistic Policy Will Be A Game Changer For the Indian Economy and will give the much-needed wings its current speed of development needs to reach and achieve the goals of coming years sooner than expected.
Conclusion Of National Logistic Policy Will Be A Game Changer For the Indian Economy
With the mega policy vision, a transformative approach to the country’s logistics sector is possible. NLP can be a game-changer with the Gati Shakti Program, the Sagarmala and Bharatmala (roadways and waterways) schemes, the Dedicated Freight Corridors, etc. Implementing the policy is hoped to reduce the over-reliance on roads to 60% from 25% globally, leading to a modal shift in logistics. India is only 30% dependent on railways, compared to 60% worldwide. The proportion of waterways in the modal mix is only 5%.
Economic growth in the country is largely driven by trade, and efficient infrastructure is crucial. With its current infrastructure and policies, India cannot meet the exponential growth required in the coming years. Robust infrastructure will reduce costs and boost exports, ultimately contributing to the country’s economic development. India will become one of the world’s leading economies within the next few years.
