National Logistics Policy – Quick Guide
Our country’s logistics sector has remained fragmented and unregulated, despite its centrality to economic growth. Given the pivotal role of the logistics sector in the development of the economy and the need to incorporate learnings from global best practices, the policy outlines an ambitious set of objectives.
The upcoming national logistics policy is expected to streamline rules and address supply-side constraints, leading to lower logistics costs and greater competitiveness for Indian products worldwide. The aim is to reduce the logistics cost from 13 per cent of the country’s GDP at present to 8 per cent in five years. The draft policy has sought to optimize the modal mix (road-60%, rail-31%, water-9%) to global benchmarks (road – 25-30%, rail – 50-55%, water – 20-25%) and promote the development of multi-modal infrastructure.
The government also plans to maintain a digital inventory of logistics-related assets and manpower strength that could be put to use in emergency situations. The policy is aimed at creating a one-stop solution to logistics and trade facilitation
The financial assistance needed for the implementation of the policy is expected to be met through National Infrastructure Pipeline Projects by the respective ministries. The policy would also aim to remove discrepancies in input tax credit, thereby facilitating smooth logistics across states.
Many countries, including South Korea and Singapore, came up with this kind of policy in the early 2000s. It covers the different types of logistics service providers. For example, some are just in freight forwarding, others in trucking, some act as full third-party logistics providers. Typically, a policy will categorise each of these services and give minimum threshold requirements for entering the market. For a truck fleet operator, this could be about minimum fleet size, specifications of trucks, axle load and carrying capacity etc
Some important thrust areas in the policy are :
Strengthening the warehousing sector in India by improving the quality of storage infrastructure including specialized warehouses across the country.
Reducing losses due to agri-wastage to less than 5% through effective agri-logistics.
Providing impetus to the MSME sector in the country through a cost-effective logistics network.
Promoting cross-regional trade on e-commerce platforms by enabling a seamless flow of goods.
Encouraging the adoption of green logistics in the country.
Driving the development of Multi-Modal Logistics Parks (MMLPs).
Setting up a Logistics Data and Analytics Centre.
Creating a Centre of Trade facilitation and Logistics excellence (CTFL) and leveraging the expertise of multilateral agencies.
Creating an Integrated National Logistics Action Plan and align with respective state development plans.
Enhancing transport and rolling stock infrastructure.
Ensuring seamless movement of goods at Land Customs Stations (LCS) and Integrated Check Points. (ICP)
A non-lapsable Logistics fund will be created, to drive progress against the key thrust areas. The Logistics fund can be deployed for the following,
Providing viability gap funding for select MMLP projects, first and last-mile projects and projects for poorly-serviced remote areas.
Incentivizing select logistics skilling programs and training institutes.
Setting up a start-up acceleration fund to incentivize the development of new technology in logistics particularly the farm to plate space.
The policy will allow seamless multi-modal freight transfer and make freight movement for key commodities cost-efficient.
High logistics cost impacts the competitiveness of domestic goods in the international market.
Effective implementation of the policy would help provide an impetus to trade, enhance export competitiveness, and improve India’s ranking in the Logistics Performance Index.
According to the policy, the proposed logistics wing will work with the ministries of food processing industries, consumer affairs, food & public distribution and the department of horticulture in respective states to identify key policy interventions and infrastructure enhancement to promote penetration of cold chain facilities and adoption of reefer (refrigerator) trucks in strategic locations.
The main challenge is while some of the subjects covered under the policy come under the Centre, the rest are controlled by states. The development of multi-modal logistics parks, or rules to do with motor vehicle movement, come under states. So, unless there is alignment between the Centre and the states, this policy will be hard to implement.
For this purpose, these committees/councils will be constituted:
A National Logistics Council (NLC), Central Advisory Committee on Logistics (CACL) and an Empowered Group of Secretaries (eGoS) are planned for effective coordination and implementation. For integrated development at the state level, the framework includes a State Logistics Coordination Committee (SLCC).
A National Logistics Dashboard to monitor in real-time the different kinds of logistics infrastructure has also been proposed, apart from services like packaging, shelving and racking, trucks services and documentation work.
The government is working on a National Logistics Efficiency and Advancement Predictability and Safety Act (NLEAPS) and this law tend to define various participants of the logistics space and create a light regulatory ecosystem.
If this policy is effectively implemented in our country then the time required to transport the goods from point A to point B will considerably reduce and not to mention the low carbon foot prints.