National Logistics Policy 2022

In News

• The Prime Minister recently unveiled the National Logistics Policy 2022.

Policy Highlights

• Aim:
  • To ensure seamless movement of goods and services across the country and cut elevated logistics costs, often considered the biggest structural bottleneck for both external and internal trade in India.
• About Logistics Sector:
  • Logistics encompasses planning, coordinating, storing, and moving resources —people, raw materials, inventory, equipment, etc., from one location to another, from the production points to consumption, distribution, or other production points.
• Policy targets:
  • The policy has simple but transformational targets to help benchmark its performance.
    • Reduce the cost of logistics from 14-18 percent of GDP to global best practices of 8 percent by 2030. 
      • Countries like the US, South Korea, Singapore, and certain European nations have such a low logistics cost-to-GDP ratio.
    • Improve the country’s Logistics Performance Index (LPI) ranking to be among top 25 countries by 2030.
    • Create data-driven decision support systems (DSS) to enable an efficient logistics ecosystem. 
    • The policy’s target is to ensure that 
      • Logistical issues are minimised, 
      • Exports grow manifold, and 
      • Small industries and the people working in them benefit significantly.
• New Logistics Policy has four critical features: 
  • Integration of Digital System (IDS): Under the IDS, 30 different systems of seven departments are integrated; these include: 
    • Data of the road transport, 
    • Railways, 
    • Customs, 
    • Aviation and 
    • Commerce departments.
  • Unified Logistics Interface Platform (ULIP): It 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. 
  • Ease of Logistics (ELOG): A new digital platform–Ease of logistics Services or E-Logs–has also been launched.
    • This will allow industry to directly take up operational issues with government agencies for speedy resolution.
  • System Improvement Group (SIG):  Monitor all logistics-related projects regularly and tackling all obstacles.

Significance

• First of its kind:
  • It is the first holistic framework for the country’s $150-billion logistics sector.
  • The new logistics policy caps eight years of the government’s efforts to create a conducive ecosystem in the logistics sector.
• Infrastructure and employment:
  • The policy is expected to help boost manufacturing and create infrastructure.
  • Strengthening the logistics sector will not only make it easier to do business, but also to generate substantial employment and ensure improvement in wages and working conditions.
• In conjunction with other programs:
  • The NLP is in conjunction with the Gati Shakti Programme, the Sagarmala and Bharatmala (waterways and roadways) schemes, the Dedicated Freight Corridors, etc., can be transformational.
  •  It will further help in improving both, Ease of Doing Business and Ease of Living.
• Helps India to become Developed Nation:
  • India, which is determined to become developed, now has to compete more with developed countries, so everything should be competitive.

Challenges

• Rail sector:
  • The rail sector suffers from many structural deficiencies which have to be eliminated fast if the logistics cost has to be halved to global benchmarks. 
  • Speed:
    • The average speed of a freight train has stagnated at 25 kmph for decades— it has to be urgently doubled to 50 kmph at least.
  • Goods operation:
    • The railways need to have a time-table based goods operation. 
    • It has to become an aggregator at the source of freight, and disaggregator at the destination, to capture the high-value small-load business (as against rake-load goods)
• Waterways:
  • Today, the total capacity of Indian ports has increased significantly and the average turn-around time of container vessels has come down from 44 hours to 26 hours. 
    • Through waterways, we can do eco-friendly and cost-effective transportation. 
  • There is valuable learning available from the river ports of China.
• Roadways:
  • Road logistics is a totally fragmented sector, where a large chunk of truck owners have a very small fleet.
• State Logistics policies:
  • Some states such as Andhra Pradesh, Assam, Chhattisgarh, Gujarat, Haryana, Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, Manipur, Mizoram, Rajasthan, Telangana and Uttar Pradesh have already formed their logistics policy. 
  • Logistics policies of 13 states are still in the draft stage.
• Logistics Performance Index (LPI) ranking:
  • India is the fifth largest economy in the world. 
  • If it has to move fast to be among the three largest economies and join the league of developed nations, it has to aim to be among the top 10 in the LPI by 2030.

Way Ahead

• The adoption of technology has been strengthening the logistic sector. 
  • E-sanchit: It has been enabling paperless export-import trade processes, and faceless assessment in customs has been rolled out. 
  • E-way bill and FASTag: These are also common in highways to improve the efficiency of the logistics sector.
• Casting the policy is one of the crucial steps in India’s journey towards being a manufacturing powerhouse.
  • Efficiency in logistics can increase a country’s exports, boost domestic manufacturing and make India a more attractive destination for global investors.
  • Infrastructure development will play an important role in India’s aim to become a $5 trillion economy.

Source: PIB