On his birthday, Modi to launch National Logistics Policy. How will it benefit India?

It aims at speeding up seamless movement of goods across country

ITDC INDIA EPRESS/ ITDC NEWS The cheetahs may get more flashbulbs and TV minutes as Prime Minister Narendra Modi will release the big cats brought from Namibia in Madhya Pradesh's Kuno National Park, but it will be another launch by the PM on his birthday on Saturday that has bigger significance on the nation’s progress.

The National Logistics Policy (NLP) set to be unveiled on Saturday would eventually, and hopefully, expedite the process of development and prosperity.

First announced in the 2020 Union budget by Finance Minister Nirmala Sitharaman, the NLP is a milestone in national policy making. Simply put, it aims at speeding up the seamless movement of goods across the country, through digitisation and re-engineering of transport and storage, as well as ramping up investments in anything ranging from storage and warehouses to multi-modal transport systems.

“An effective and efficient logistics ecosystem has the potential to promote domestic and international trade, boost global competitiveness, raise incomes, push the 'Make in India' initiative, and reduce economic disparities among regions,” said Anshuman Singh, chairman and managing director, Stellar Value Chain Solutions.

If logistics sounds a wee bit technical, consider this. Sending goods and products from one point in the country (say the producing factory or farm) to another (the end consuming city, or if it is for export, the seaport or airport)—ranging anything from rice, wheat and vegetables to finished products like cars and computers—costs a lot more than most other leading economies.

In fact, according to Commerce and Industries Minister Piyush Goyal, India spends as much as 14 per cent of its GDP on these logistics costs, compared to Germany and Japan, who, thanks to their developed infrastructure and logistics system, spend just about 8 per cent.

According to a World Bank estimate in 2018, India ranked 44th in logistics costs, way behind China which was at the 14th position.

Now, think of an interconnected system of transport and storage facilities to ease the situation, all helped by digitised processes which speed up movement of cargo, right up to clearances needed and onward movement (say, for exports). You are looking not just at time saved, but cost savings on fuel, cargo vehicles as well as idle hours spent waiting for permissions. Think a lot more warehouses (including refrigerated storage for perishable goods), multi-model transport, highways and freight corridors, all linked through government-backed technology and simplified rules.

The aim of the new policy is to reduce the indirect logistics cost by 10 per cent, which in turn is expected to contribute as much as 8 per cent more margin to exports. This will be achieved by a variety of measures, including digitally connecting roads, railways, airports, seaports, customs and concerned ministries to ease cargo movement.

“The NLP will also take considerable steps to address the issue of Indian ports and airports having longer dwell times than the world norm,” said Singh of Stellar Value Chain Solutions.

As part of NLP, the government will also put in place a ‘System Improvement Group’, which will monitor all logistics-related projects regularly to ensure there aren’t any delays or hurdles.

While the government is paying close attention to developing infrastructure through projects like ‘Gati Shakti’, NLP goes one step ahead. “It can bring all key stakeholders of the logistics supply chain on a unified platform and strengthen technology interventions,” said Ravi Jakhar, chief strategy officer at Allcargo Logistics, who said the impact of NLP will be similar to what UPI did to mobile payments and what ONDC might do to e-commerce. “(If a) similar approach is taken for logistics, we can expect a significant boost to the ecosystem which can bolster supply chains in the country, making them more agile and interconnected.”