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.
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.
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.
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.
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.
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:
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.
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.
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 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.
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.
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.
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.
Suggested Read: List of Logistics and Supply Chain Management Software in India
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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