New logistic policy
New Logistic Policy
India Inc. has given a thumbs-up to the government’s announcement of the New Logistics Policy (NLP), particularly within the logistics industry. The long-awaited regulatory framework, aimed at solving the challenges faced by this fragmented national sector, was unveiled on September 17. This new policy is primarily focused on reducing logistics costs, optimizing processes for better collaboration, and fostering job creation along with skill development.
What is Logistics?
Logistics refers to the management and coordination of resources such as people, inventories, raw materials, and equipment, ensuring they are efficiently moved from one place to another. It includes procurement, storage, and delivery, along with assessing potential distributors and suppliers for feasibility and accessibility.
What is NLP 2022?
About:
- The National Logistics Policy (NLP 2022) emphasizes key areas like process re-engineering, digitization, and multi-modal transportation.
- The policy's significance stems from the fact that India's logistics costs are currently higher than those in many developed nations, impacting the competitiveness of domestic products in global markets.
Goals of the National Logistics Policy
The main goal of the NLP is to lower logistics costs in India, bringing them in line with international best practices.
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Cost Reduction: The logistics cost in India is around 14-18% of the GDP. The goal is to cut this to 8% by 2030, aligning with global standards.
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Logistics Performance Index (LPI): India ranks 44th in the LPI (2018), but the target is to make India one of the top 10 countries in LPI by 2030, achieving faster growth similar to South Korea.
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Productivity & Exports: A key target is reducing logistics inefficiency to boost exports and help small businesses thrive, ultimately benefiting workers and the economy as a whole.
Background and Importance
India’s logistics costs are significantly higher compared to other industrialized nations, which has made it essential for the government to address these inefficiencies through the NLP. Lower logistics costs mean increased competitiveness of both domestic and export products.
Cost-effective logistics lead to higher productivity across all sectors, driving value creation and fostering entrepreneurship. The government has long prioritized ease of doing business, and the introduction of the National Logistics Policy is a crucial part of this initiative.
In 2021, the PM GatiShakti National Master Plan for Multi-Modal Connectivity was introduced to enhance logistical efficiencies, and the National Logistics Policy will add significant momentum to this plan.
Key Features of the Policy
1. Unified Logistics Interface Platform (ULIP) The policy aims to digitize logistics services by consolidating them into a single platform. This will simplify the cumbersome processes exporters face, making them more efficient and transparent.
2. Ease of Logistics Services (e-logs) A new digital platform, e-logs, has been introduced. This allows industry organizations to directly communicate with government entities to resolve any operational challenges. The platform is designed to ensure that these issues are addressed quickly, improving overall performance.
3. Modal Shift in Logistics Currently, India relies heavily on roadways for logistics, with over 60% of logistics traffic on roads. The goal is to shift this focus towards railways, which internationally accounts for around 60% of logistics traffic, compared to India’s 30%. This shift will lead to more sustainable and cost-effective logistics solutions.
PM Modi’s Statement on NLP
Prime Minister Narendra Modi, while unveiling the policy, made a significant remark about the logistics cost reduction target. He stated, “From 13-14% logistics cost, we should aim to bring it to single digits as soon as possible. If we want to compete globally, this is low-hanging fruit.”
The PM GatiShakti National Master Plan will also complement the National Logistics Policy, enhancing efficiency across the logistics ecosystem.
Summary
The National Logistics Policy (NLP) is set to revolutionize the Indian logistics sector by reducing costs, enhancing efficiency, and improving coordination. With new digital platforms like ULIP and e-logs, the policy is designed to support the growth of the logistics industry, boosting exports and helping small businesses thrive. The policy is expected to address India’s logistical challenges, making the country more competitive in the global market.
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