PM Narendra Modi wants to reduce logistics costs to 8% of GDP by 2030. Can the new logistics policy help?

India has a new logistics policy. On September 17, Prime Minister Narendra Modi unveiled the National Logistics Policy (NLP), which is aimed at promoting the seamless movement of goods and enhancing the global competitiveness of Indian industry.

The policy constitutes planning, coordination, storing and movement of resources—like people, raw materials, inventory, equipment, etc.—from one location to another, from production to consumption, distribution, or other upstream production points. The policy has also proposed some key targets to be achieved, like a reduction in the cost of logistics from the current 14-18 per cent of the country’s GDP to the global best of around 8 per cent by 2030. Countries such as the US, South Korea, Singapore, and some European nations boast of such a low logistics cost-to-GDP ratio. Another target set by the policy is to achieve a top 25 ranking by 2030, on the Logistics Performance Index (LPI) curated by the World Bank. NLP intends to cut the logistics costs in India by half, and thus achieve the set targets. The government has also envisioned a data-driven decision support system (DSS) to enable an efficient logistics ecosystem in the country.

To attain these targets, it will create a Unified Logistics Interface Platform (ULIP) to integrate seven ministries—Ministry of Ports, Shipping and Waterways; Ministry of Civil Aviation; Ministry of Road Transport and Highways; Ministry of Commerce and Industry; Ministry of Railways; Ministry of Finance; and Ministry of Electronics and Information Technology—on one platform, to provide logistics operators with real-time information about cargo movement in the country. Apart from ULIP, in a bid to facilitate an environment where the industry can directly take up operational issues with government agencies, the government has envisioned a digital platform called Ease of Logistics Services (E-Logs).

The road map to achieve these targets also includes creating a comprehensive Logistics Action Plan (LAP) comprising an integrated digital logistics system, standardisation of physical assets, benchmarking of service standards, human resource development, capacity building, and development of various logistics parks, among others. “The logistics industry in India is currently marred by multiple challenges like transportation roadblocks, shipping woes and a lack of technological infrastructure, which hinders its competition with developed economies due to the unorganised structure, manual interface and fragmented nature of the sector,” says Sanjay Bhatia, Co-founder and CEO of digital freight forwarding firm, Freightwalla.

He further adds that implementing cutting-edge tech-based solutions, introducing digitisation for the last-mile manufacturing stakeholders, including MSMEs, and establishing a robust network of world-class infrastructure will transform the shipping and logistics sector in the country.

Earlier the government had rolled out the PM Gati Shakti master plan to give a push to multimodal connectivity and reduce logistics costs. And with the logistics policy recently introduced, things should improve for the country’s logistics sector.

@RajatMishra9518