GAD

Global Affairs Desk

Tue Jun 18 2024

National Logistics Policy, 2022

~ By Samidha Jain on 10/16/2022

National Logistics Policy, 2022

On the 17th of September 2022, while re-introducing Cheetahs in the country, The Prime Minister introduced National Logistics Policy (NLP) at Vigyan Bhawan, New Delhi. He said, “as the cheetah moves seamlessly fast, we need our logistics to be so well integrated and robust that the merchandise and goods move as fast as the Cheetah.”

The policy was announced by the Finance Minister in the 2022-23 Union Budget. NLP is an important step in creating a smooth, efficient, well-integrated and cost-effective logistic system which is imperative for the transition of the country from a developing to a developed economy. It aims at bringing down the share of 14%-18% in the GDP to a mere 8% by 2030. But first, what is Logistics and why is it so indispensable for India's economic upliftment that the Prime Minister referred to it as “Pran” (soul) for developed India?

Logistics is the process of planning and executing the efficient transportation of goods from the point of origin and disposal. It broadly includes three types of facilities essential for trade:

  1. Transport services, for the movement of trade. Major services are Railways, roads and ports.
  2. Storage facilities are particularly stressed for perishable and semi-perishable goods, especially agro-based goods.
  3. The smooth functioning of government regulations and services which facilitate trade such as licensing and customs.

The Logistic sector is growing at a sluggish rate of 7.8 CAGR (Compound Annual Growth Rate) and is expected to grow at 10.5 CAGR till 2025 by ICRA (Investment Information and Credit Rating Agency of India). The sector provides employment to around 22 million people and was ranked 44th on the Logistic Performance Index in 2018 by the World Bank. Moreover, the sector is pretty unorganized and fragmented. There are multiple stakeholders both private and government but the organized players are very minimal.

For the world’s 5th largest Economy thus, NLP is a comprehensive and immediate effort to restructure the $160 billion logistics sector. It aims at achieving “quick last-mile” delivery, ending transport-related challenges, saving time and capital of manufacturers and preventing the wastage of perishable goods. Not only that it targets increasing competitiveness in the sector which will result in a better quality of goods and trade. The policy is further divided into four steps under CLAP (Comprehensive Logistics Action Plan) for its implementation.

CLAP:

  1. Integration of Digital System (IDS), will digitally integrate different systems of 7 departments like railways, aviation, foreign trade etc. into 3, for better communication and interlocking.

  2. The Unified Logistics Interface Platform (ULIP), will ensure a more transient and quick cargo movement by exchanging information covertly in real-time. In support of this, the National Industrial Corridor Development Corporation (NICDC) Logistics Data Bank Project has also been leveraged.

  3. Ease of Logistics (ELOG), ensures an easy flow of goods with transparency and accessibility.

  4. The System Improvement Group (SIG) is set up as the central body to monitor all the departments and logistics of the country.
    According to the Prime Minister, The NLP will bring new zeal of energy in all sectors of the economy. Policy plus performance will equate to better growth and will land India in the top 25 countries of the LPI report by 2030. He believes that policy should not be viewed just as a document as it is highly driving and necessary. It took the government approx. 8 years to devise the policy.

NLP is a major development in the consolidation of the Logistics Sector in the country. It, if actually implemented can make India`s economy faster, which will trigger economic growth, a better quality of goods, a competitive economy and more employment. The policy is not at all complex and should be implemented in steps. It is also necessary to be patient with this policy as its results will come out slowly. Hopefully, NLP will be the boost for the growing economy of India in the coming years.

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