National logistics policy will drive India’s next economic growth curve

National logistics policy will drive India’s next economic growth curve

The logistics industry is regarded as the backbone of the Indian economy, with estimates indicating that it’s valued at $215 billion and increasing at a CAGR of 10.5%. Furthermore, the sector employs around 22 million people directly and indirectly. However, the industry has several challenges, including tax structure and storage issues, a high order intensity ratio, and other high supply chain costs. 

India’s logistics sector is highly defragmented and complex with more than 20 government agencies, 40 PGAs, 37 export promotion councils, 500 certifications necessary, and 10000 commodities to be exported. Furthermore, the sector also includes 50 IT ecosystems, banks, insurance companies, 129 ICDs, 168 CFSs, 200 shipping agencies, 36 logistics services, and 50 IT ecosystems. Additionally, 81 authorities and 500 certificates are required for export & import. To solve this issue, the government enacted the National Logistics Policy.

The National logistics policy aims to improve India’s trade competitiveness, generate more jobs, and improve the ease of doing business which would lay the foundation for India to become a logistics hub. The deployment of the policy would bring a paradigm shift in the logistics industry by streamlining processes with technology and digitalization. This policy is an example of inter-ministerial collaboration and will help in integrating the supply chain.

This new policy has four distinctive features: Integration of Digital System (IDS); Unified Logistics Interface Platform (ULIP); Ease of Logistics (ELOG); and System Improvement Group (SIG). Under ULIP the government plans to integrate seven ministries on one platform to provide logistics companies with information about cargo movement in the country.  The platform has its peculiarity with a distinctive approach, which is one of its kind globally. Through this, integration of ministries the data is collectively brought in, and this emphasizes the importance of data in the logistics industry. Similarly, a new digital platform Ease of Logistics Services (E-Logs) has also been launched to assist industry stakeholders in resolving concerns by reaching out to the government.

The policy will be enhanced further when used in conjunction with earlier connectivity and infrastructure development initiatives like The Gati Shakti Programme, The Sagarmala policy, and The Bharatmala policy, incorporating these policies would contribute to the establishment of a single window e-marketplace as a one-stop shop for important knowledge and information sharing, hence easing logistics facilitation issues in the country.

As India strives to become a $5 trillion economy by 2024-25, a more agile logistics framework that focuses on the unorganized sector and the overall trade network could assist the country in attaining this vision. This is where NLP would provide the sector with the necessary impetus. NPL on the macro level will improve the warehousing capacity and facilitate quicker communication in bringing consumer goods closer to their demand side. As the logistics sector strengthens, the manufacturing sector, automobile sector will also get significant boost in their business with great delivery turn arounds. NLP would invigorate energy in all sectors and boost India’s global trade.

Considering the certain boost in international trade, the policy would assist in making Indian ‘Atmanirbhar’ or self – reliant, ushering foreign investment, and providing new prospects to the country’s startup entrepreneurs. Moreover, the policy would benefit the farmers greatly, since it would allow them to market their goods more swiftly, reduce waste, and avoid unnecessary delays, all of which would cut overall price.

The stakeholders further anticipate that the National logistics policy will bring a revolutionary approach to the nation’s logistics environment, boosting the effectiveness of supply chains. Logistics software provider companies predict the newly developed policy will enable a modal shift in logistics away from the existing over-reliance on roads (over 60% share vs 25% internationally) and toward trains (30% share versus roughly 60% globally) and waterways, which now have a 5% part in the modal mix.

To summarize, NLP is a significate step in the right direction, the sector is already witnessing an increased flow of domestic and foreign funds. The policy would also encourage innovation and draw in more investment while making the industry more competitive.

The policy has the potential to improve India’s competitiveness on a global scale. It is conceivable that India might eventually be among the top 25 countries on the World Bank’s Logistics Performance Index (LPI).

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Views expressed above are the author’s own.

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