National Logistics Policy to be unveiled on Sept 17: Why it could be the next big reform of Modi govt

Prime Minister Narendra Modi will release the comprehensive action plan under the National Logistics Policy tomorrow on his birthday, which is being touted as the next big thing in terms of reforms for the logistics sector. The policy aims to make India a global logistics hub with enhanced economic activity post pandemic and achieve global benchmarks by 2030. Experts in the field have stated that the high logistics cost brings down the competitiveness of domestic goods in the international market, and therefore, the policy holds a lot of hope and can have long-term benefits. 

What is the National Logistics Policy? 

The policy was first introduced in 2020 during the Budget speech by Finance Minister Nirmala Sitharaman. In the past, the government has claimed that the new policy will bring in an integrated and tech-enabled approach to logistics operations to bridge the efficiency gap. On September 13, Commerce and Industry Minister Piyush Goyal said that the government has stressed the need to reduce logistics costs in the country from the current levels of 13-14 per cent of GDP. 

What’s the aim? 

As per news reports, the logistics costs in India are very high, and, therefore, that brings down the competitiveness of domestic goods in the global market. While India spends 13-14 per cent of its GDP on logistics, other major economies like Germany and Japan spend around 8 to 9 per cent of the GDP on logistics costs. 

Also read: Govt’s ambitious new policy on logistics will be unveiled on Sept 17; all you need to know

The new policy will remove hurdles within the logistics sector and organise it. The policy aims to reduce costs, and create employment opportunities, while the government is also looking at skilling the workforce.  

As per government estimates, streamlining the sector will facilitate 10 per cent decrease in indirect logistics cost leading to a 5 to 8 per cent rise in exports. 

How big is the sector? 

According to the Ministry of Commerce and Industry, the sector provides livelihood to more than 22 million people, at present. As per a report in The Economic Times, the logistic sector currently involves more than 20 government agencies, 40 Partner Government Agencies (PGA), 37 export promotion councils, 500 certifications, over 10,000 commodities and has a $160-billion market size. 

That’s not all. Around 200 shipping agencies, 36 logistics services, 129 Inland Container Depots (ICD), 166 Container Freight Stations (CFS), 50 IT ecosystems, banks and insurance agencies are also part of the network. 

Steps to focus on 

PM Narendra Modi, who will be unveiling the policy on 17 September, is expected to touch upon four main steps, as per news reports.  

1.    Integration of Digital System (IDS): This system will look forward to integrating 30 different systems of seven different departments, which are road transport, railway, customs, aviation, foreign trade, and commerce ministries. The digital data from these departments will be integrated under IDS. This is directly affecting the shorter cargo movement in a positive way. 

2.    Unified Logistics Interface Platform (ULIP): This system will monitor smooth cargo movement. 

3.    Ease of Logistics (ELOG): Under this, the new policy will simplify the rules, which is expected to simplify basic business. 

4.    System Improvement Group (SIG): This system will be used to monitor all logistics-related projects regularly and will facilitate the removal of any hurdle.