PM Launches National Logistics Policy in India 2022

On 17th September 2022, Honorable Prime Minister Narendra Modi announced the National Logistics Policy 2022 to ease the movement of goods and boost the trade sector. Currently, logistics alone costs 13-14% of India’s GDP which is almost double of what is spent in other developed countries.

What Is the National Logistics Policy 2022?

The Indian logistics sector today employs more than 22 million individuals. The National Logistics Policy focuses on re-engineering and digitizing Indian logistics and reducing logistic costs from the current 13-14% to a single-digit number.

The low percentage will indicate the efficiency and ease with which businesses can operate in terms of freight management and transportation infrastructure. Moreover, the NLP 2022 will focus on making the logistics industry organized by laying emphasis on streamlining processes, reducing logistics costs, upskilling the workforce, and more.

Why Was There a Need for the National Logistics Policy?

As discussed, India spends about 13-14% of its GDP just on logistics costs, as compared to other countries such as Japan and Germany, just spend about 8-9% of their GDP on the same. This is just the result of their highly developed infrastructure and advanced systems used for managing logistics.

But as far as India is concerned, it lacks behind a lot in this industry. In the Logistics Performance Index, it stands at 44th position, which is way behind than the United States and China which hold the 14th and 26th position respectively in the index.

The Ministry of Commerce & Industry said that about more than 22 million Indian people’s livelihoods depend on the logistics industry. So, improving the sector will give a boost to exports with an increase of 5-8%, while reducing the indirect logistics costs.

Key Objectives of the National Logistics Policy

To reduce logistics cost in India from 13-14% to less than 10%
Be a part of the top 25 countries globally by 2030 in the Logistics Performance Index ranking, currently India stands at 44th position
Create more job opportunities in the logistics industry
Create a data driven and advanced Decision Support Systems (DSS) to make efficient and informed decisions.

Focus Areas of the National Logistics Policy

The Director General of CII, Chandrajit Banerjee stated, “Reduced logistics cost and increased logistic efficiencies will energize the economy across sectors in multiple ways and take us many steps closer to emerging as a global manufacturing powerhouse.”

The National Logistics Policy 2022 consists of four key focus areas according to CLAP, the Comprehensive Logistics Action Plan.

Integration of Digital System (IDS)

The digital system will integrate all the information belonging to different ministries on a single platform to ensure faster and better workflow. This movement will include 30 systems from seven departments including the railways, road transport, aviation, customs, commerce, commerce, and foreign trade.

Unified Logistics Interface Platform (ULIP)

The ULIP platform is designed to bring all digital services related to transportation on one single platform and achieve high visibility across the entire logistics ecosystem. The three major components that define the Unified Logistics Interface Platform are as follows:

Integrating all the existing information from different ministries on one platform to get a holistic view and easily interlink all data points. The emphasis will be on ensuring compliance, clearance, and authorization as the critical aspects of logistics.
Enabling data exchange with private logistics service providers, industries, and other players. This will ensure the private players to access the data available with ULIP and share their data at the same time related to dispatch, transportation, delivery, etc. This complete data exchange focuses on streamlining processes to achieve better efficiency.
To make the logistics processes more unified, a centralized digitized reference number can be generated for all the documentation in the supply chain.

Ease of Logistics (ELOG)

ELOG is the digital resolution dashboard that can be used for coordinating, monitoring, and registering time specific issue resolution. The dashboard further enables users to access the status of issue resolution, and timelines for the same.

System Improvement Group (SIG)

The SIG feature of NLP policy 2022 will monitor and track all projects related to logistics so that businesses can tackle all the obstacles with ease.

Impact of the National Logistics Policy on Transporters and Manufactures

The National Logistics policy is likely to benefit transporters and manufacturers with a much-needed growth in exports. It is expected that with the policy, India’s logistics industry will expand its footprints into the global market.

Further, let’s understand what impact the NLP 2022 policy is likely to bring:

The Unified Logistics Interface Platform (ULIP) will take online transportation services to one centralized platform. Eventually, this will save exporters time and other resources, along with providing end-to-end visibility of the movement of goods across the logistics lifecycle.
In addition to this, the policy allows tracking the trucks, railways, and exim containers’ movements through FastTAG data. This will provide a 360-degree comprehensive visibility for all the materials moving on wheels, allowing for better inventory planning and customer service.
Movement tracking would only be possible through Multi-Modal Logistics Parks (MMLPs), that is likely to be adopted by all central and state ministries. This will facilitate seamless integration of different modes of transport.
Along with logistics, also comes warehousing. The NLP 2022 plan will also focus on various warehousing aspects that include benchmarking, rating, adoption of new technological solutions, and more. This will benefit manufactures by improving the ease of doing business while simultaneously reducing operational costs.
The state and center governments would work together to create a logistics master plan covering different projects by ministries. It will ensure the right modal mix, multi-modality, and first & last mile connectivity. The PM Gati Shakti National Master Plan is expected to encourage this collaboration.
Implementation of a centralized platform would help transporters and shippers to validate a truck’s and driver’s credentials. It will majorly help in reducing misrepresentations and theft and build more trust with time. Moreover, small fleet owners would start getting load orders on their back trip, resulting in the low freight cost.

Major Concerns with the National Logistics Policy

The National Logistics Policy is an ambitious and highly aspiration project. Indeed, its successful implementation will bring major transformation in the logistics industry. Although, there are three major concerns that surround the NLP policy 2022.

Execution

NLP 2022 won’t be a success without a solid execution plan. There is a need to address challenges like timely completion of infrastructural projects, creating secured digital databases, and managing the use of storage facilities like warehouses, etc. The right execution will only derive the desired results from NLP 2022.

Sustainability in the Logistics Industry

Majorly the connectivity in the logistics industry is dependent on Indian roads, which is one of the major contributors to the rising global carbon emissions. To address this challenge, sustainable actions need to be taken such as adopting zero emission trucks to reduce diesel consumption, creating a balance among all modes of transport, data driven decision making, and more.

Current Working Model

Currently the logistics industry is unorganized with no standardized pricing, different operators in different locations charge differently. There is a need to set some benchmark for deciding pricing with justified flexibility.

National Logistics Policy: The Way Forward

The use of technology in the logistics industry has resulted in a paradigm shift, and now with the introduction of the National Logistics Policy, it is expected to add more. The industry needs to address inefficiencies in the railway, road, and water transport system to reduce the freight cost. In fact, it’s time to improve air logistics to transport perishable and high value items.

However, the response to the National Logistics Policy till now has been on the positive end, where stakeholders are expecting technology to bring positive advancements and reduce the logistics cost to GDP to a single digit number from 13-14%. Additionally, focusing more digitization and technology adoption to bring more transparency for transporters and manufacturers in the supply chain ecosystem.

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