By Asgar Shakoor Patel
In a world driven by speed and efficiency, the role of logistics in facilitating economic growth and global competitiveness is paramount. Recognizing this, India’s Honourable Prime Minister, Mr. Narendra Modi, unveiled the transformative “National Logistics Policy” (NLP) in September 2022, at New Delhi, ushering in a new era for India’s logistics sector. Additionally, the PM emphasized the need for our goods to move faster, drawing an analogy to the swift movement of a ‘cheetah in the jungle.’ This policy announcement marks a significant milestone in reshaping the logistics landscape and catapulting India onto the global stage. Furthermore, it has already shown promising results, as India climbed from 44th to 38th position in the World Bank’s Logistics Performance Index (LPI) and the policy has set an ambitious target of reaching the 25th position by 2030.
Reducing Logistics Costs
One of the primary objectives of the National Logistics Policy (NLP) is to bring down the logistics cost from 14% to 8% of the GDP, aligning it with global benchmarks such as the USA, which already operates at an 8% logistics cost. By streamlining operations and introducing efficient practices, the policy aims to enhance competitiveness and economic growth.
Highlight 1: Enhanced Multi-modal Logistics Coordination
India has traditionally been heavily dependent on road transport for logistics, while developed countries prioritize railways. The NLP aims to address this disparity by enabling better coordination among various modes of transport, including road, railways, ocean, and air. This coordinated approach will help reduce over-reliance on roads and optimize the use of different transportation options. By integrating these modes, the policy seeks to create a seamless and efficient logistics network.
Highlight 2: Unified Logistic Interface Platform (ULIP)
The introduction of the Unified Logistic Interface Platform (ULIP) is set to be a game-changer for the logistics industry in India. Similar to the transformative impact of Unified Payment Interface (UPI) in the banking sector, ULIP aims to enhance efficiency and reduce logistics costs by creating a transparent, one-window platform that provides real-time information to all stakeholders. This integrated system will enable visibility of multi-modal transport and integrate existing systems of various ministries, governing bodies, and private stakeholders. ULIP will facilitate smoother operations, faster decision-making, and improved overall logistics performance.
Highlight 3: Addressing Reverse Logistics Challenges
India faces significant challenges in reverse logistics, with many trucks returning empty or with minimal loads after delivering goods. This inefficiency increases transportation costs and negatively impacts the overall logistics ecosystem. The implementation of ULIP under the NLP will help eliminate or minimize reverse logistics problems by optimizing the utilization of trucks. By providing better visibility and opportunities for matching return loads, ULIP will lead to lower costs, increased operational efficiency, and faster movement of goods.
Highlight 4: Harnessing the Power of Waterways
India boasts an extensive coastline and numerous waterways, which offer cost-effective transportation options. The NLP aims to leverage this advantage by facilitating the optimum utilization of waterways. ULIP’s integrated platform will enable efficient planning and execution of waterway logistics, unlocking the potential for increased trade and reduced costs.
Implications for the Economy and Global Competitiveness
The National Logistics Policy (NLP) places logistics at the forefront of India’s economic development. As the logistics sector serves as a barometer of the nation’s overall economic health, the policy’s objectives align with India’s aspirations to become a global economic powerhouse. By reducing logistics costs and improving efficiency, India can make its goods more competitive in the international market. Furthermore, discussions have been initiated to bring Petroleum, Diesel, and Aviation Turbine Fuel (ATF) under the Goods and Services Tax (GST) to further reduce overall logistics costs and support the growth of the Indian economy.
In conclusion, the National Logistics Policy (NLP) is a transformative step towards aligning India’s logistics sector with global benchmarks. By fostering a technology-enabled, integrated, cost-effective, and dependable ecosystem, the policy empowers stakeholders to make informed decisions and drives sustainable economic growth. India’s logistics ecosystem is further strengthened by the National Logistics Policy’s emphasis on data-driven technologies, ensuring its competitiveness in the international market.
The author is Chairman Emeritus of Patel Integrated Logistics Ltd.
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