National Logistics Policy 2022 | 20 Sep 2022

Why in News?

Recently, the Government has launched a National Logistics Policy (NLP) 2022, aiming to achieve ‘quick last-mile delivery', end transport-related challenges.

What is Logistics?

• 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.
• The term "logistics" describes the total process of controlling the acquisition, storage, and delivery of resources to their intended location.
• It entails locating potential distributors and suppliers and evaluating the viability and accessibility of such parties.

What is NLP 2022?

• About:
  • The policy focuses on key areas such as process re-engineering, digitisation, and multi-modal transport.
  • It is a crucial move as high logistics cost impacts the competitiveness of domestic goods in the international market.
  • The need for a national logistics policy was felt since the logistics cost in India is high as compared to other developed economies.
• Goals:
  • Logistics costs have to be cut by half to be near global benchmarks by 2030 by reducing the cost of logistics from 14-18% of GDP to global best practices of 8%.
    • Countries like the US, South Korea, Singapore, and certain European nations have such a low logistics cost-to-GDP ratio.
    • The current cost is 16% of GDP.
  • Being the 5^th largest economy in the world, India aims to be among the top 10 in the LPI (Logistics Performance Index) by 2030. It has to match the pace of South Korea.
    • In 2018, India was ranked 44th in the LPI.
  • Creating 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.
• Key Building Blocks:
  • Digital Integration System: It will lead to seamless and faster work-flow, making logistics significantly more efficient.
  • Unified Logistics Interface Platform: It aims to collapse all logistics and transport sector digital services into a single portal, thereby freeing manufacturers and exporters from the present tyranny of long and cumbersome processes.
  • Ease of Logistics Services: E-Logs, a new digital platform, will allow industry to directly take up operational issues with government agencies for speedy resolution.
  • Comprehensive Logistics Action Plan: The Comprehensive Logistics Action Plan comprising integrated digital logistics systems, standardisation of physical assets, benchmarking service standards, human resource development, capacity building, development of logistics parks, etc.

What is the Significance of the Policy?

• PM Gati Shakti will get further boost and complementarity with the launch of the National Logistics Policy.
• The Policy will help make the sector an integrated, cost-efficient, resilient, and sustainable logistics ecosystem in the country as it covers all bases of the sector along with streamlining rules and addressing supply-side constraints.
• The policy is an endeavor to improve the competitiveness of Indian goods, enhance economic growth and increase employment opportunities.

Way Forward

• 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. 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.
  • 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.
• For decades the country has talked about eco-friendly and cost-effective inland waterways freight movement, but nothing has happened.
  • There is valuable learning available from the river ports of China, who puts key emphasis on Port Infrastructure.
• Road logistics is a totally fragmented sector, where a large chunk of truck owners have a very small fleet.
  • There is a clear case for the aggregation of small operators with government-supported aggregation apps. Similarly, there is a need for large players in the sector to drag costs down.
• Apart from improvement in key functional areas, the size of our ports have to grow manifold – it is not without reason that 10 of the world’s top 20 ports are in China.
• It is time to give wings to air logistics and drastically improve the transport of high-value and perishable items.

Source: PIB