National Logistics Policy: India’s new policy framework to become globally competitive

India Inc, particularly the logistics industry, has hailed the launch of the New Logistics Policy (NLP) by the government.

Launched on September 17, the much-awaited policy framework caters to all the key stakeholders across the country’s vast yet fragmented logistics landscape. The new framework comes with a special emphasis on streamlining processes for seamless coordination, and reduction in overall logistics cost, besides pushing employment generation and skilling of the workforce.

Notably, while launching the policy, Prime Minister Narendra Modi said, “From 13 to 14% logistics cost, we should all aim to bring it to single-digit as soon as possible. This is a low hanging fruit, if we have to become globally competitive.” The PM further asserted that the PM Gatishakti National Master Plan will support the National Logistics Policy.

The government further stated that Unified Logistics Interface Platform ULIP will bring all the digital services related to the transportation sector into a single portal, freeing the exporters from a host of very long and cumbersome processes. Under the mega policy vision, a new digital platform Ease of logistics Services – e-logs has also been started. Through this portal, industry associations can directly take up any such matters which are causing problems in their operations and performance with the government agencies. A complete system has also been put in place for the speedy resolution of such cases.

Industry observers are of the view that NLP will bring in a brand-new transformative approach to the country’s logistics ecosystem, leading to increased efficiency across supply chains. Arindam Guha, Partner, Government & Public Services Leader, Deloitte India, expects the new scheme to facilitate a modal shift in logistics — from the current over-dependence on roads (over 60% share currently as against 25% globally) to railways (30% currently vis-à-vis around 60% globally) and waterways that currently has only 5% share in the modal mix.
Stakeholders in the logistics industry have called the NLP a huge leap forward for the country’s logistics sector.

“The NLP’s launch is a landmark move for the sector. The policy will help bring down the transportation, warehousing and inventory costs, which will consequently reduce the overall logistics cost down to around 8% of GDP in the next 5 years. Digitalization of the logistics sector and the creation of unified portals will play a crucial role in bringing the logistics sector together. While ULIP will serve as a single window e-logistics market, ELOG will comprehensively address the industry’s issue says Ketan Kulkarni, Chief Commercial Officer, Blue Dart.

Industry observers also affirm that the enhanced focus of the policy on enhancing human capital and operating standards are well-intended e initiatives aimed at building up the formalization of the sector. Notably, the policy is also expected to boost employment and address manpower issues in the sector with the introduction of logistics and supply chain courses for students.

Vineet Agarwal, MD at Transport Corporation of India, opines that the NLP will herald a paradigm shift in the logistics sector. In his view, the push toward seamless multimodal transportation and modern connectivity will be a game changer as it will shift the transportation stress from just the road to other modes as well. “It will help us drive the ESG goals and focus on a better cost structure. The paperless supply chain initiative, strengthened cooperative federalism, ease of logistics service portal (e-log), and standardisation of the warehousing sector will help India become one of the top 25 logistics performers in the world,” Agarwal adds.

As India aims to become a $5 trillion economy by 2024-25, connectivity and superior infrastructure will become more critical, according to Rampraveen Swaminathan, MD and CEO of Mahindra Logistics. Swaminathan says the NLP comes as a tremendous boost for the sector to this effect. He adds the policy will further augment warehousing capacity, and take products closer to the consumption points.

Industry representatives, in particular, have lauded the government’s increased push toward technology adoption via various measures in the new policy. Notably, the government has lately worked towards measures like paperless EXIM trade process through e-sanchit, faceless assessment for customs, provisions for e-way bills, FASTag etc. that have brought increased efficiency to the industry.

Kami Viswanathan, Senior Vice President, FedEx Express, Middle East Indian Subcontinent and Africa, asserts that as India looks to modernize infrastructure and supply chains, it’s clear that technology is the key for unifying all involved stakeholders and helping manage complexity better. “The development of an integrated and efficient logistics ecosystem is a crucial enabler for India to become a $5 trillion economy and improve trade competitiveness,” she adds.
Arham Pratap Jain, founder of digital freight platform trucknetic, says the policy will also provide a boost to PM GatiShakti master plan launched last year. “It will streamline multi-modal connectivity, which is significant to reduce load from roads and highways. However, the one thing that will help us hit it out of the park is an integrated digital logistics system, which will help streamline the process and make it easier for both producers and consumers,” Jain says.

“The integrated digital system will further streamline and speed up the sector while ensuring safer logistics and lower costs across the country. The NLP will prove to be a driving force in the progress of the sector and will help India set standards for going paperless across the world. It will further help pivot SMEs and MSMEs in the direction of accelerated growth – as costs get rationalized and government agencies, partners, business councils, and other key stakeholders get connected through technology. Overall, NLP promises to help increase the competitiveness of domestic goods in the global market thereby, encouraging businesses to strengthen their exports from India and create new employment opportunities,” says Deepak Shrivastava, Managing Director, UPS Indian Subcontinent.

Notably, the government’s latest policy comes with a Comprehensive Logistics Action Plan (CLAP) which details the NLP’s specific targets. These include: Reducing India’s logistics cost to be comparable to global benchmarks by 2030 and aiming to be among the top 25 countries by 2030 in the Logistics Performance Index (LPI).

According to the (latest available) World Bank Logistics Index of 2018, India was ranked 44th in logistics costs, whereas nations like China and Vietnam were better placed at the 26th and 39th positions, respectively.

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