The National Logistics Policy has been developed by the government to improve the efficiency and effectiveness of the transportation and distribution of goods and services. The policy covers a range of areas, such as infrastructure development, regulatory frameworks, investment promotion, and skills development.
The recent policy in India is passed with the major aim of improving and enhancing the logistics sector’s competitiveness along with creating a unified policy environment. For instance, it seeks to reduce logistics to less than 10% of GDP by 2022. To have a better insight of this recent policy, give this article a quick read.
What are the Objectives of the National Logistics Policy?
In general, the Government of India publishes a logistics policy with the main aim of improving the efficiency of goods and service transport in the country. The national logistics policy of 2022 also comes with a set of objectives which are as follows:
- The cost of logistics is to be lowered to 10% of GDP uniformly despite its high fragmentation.
- To raise competitiveness in the Indian goods market
- To promote economic boost and increase job opportunities
- To improve India’s ranking in the Logistics Performance Index globally
- To leverage upcoming advanced technology and skilled manpower in order to provide a seamless and integrated transportation system through multiple modes.
What is India’s Competitive Quotient in the Logistics Sector?
To understand the competitiveness of the logistics sector in India we have to look at the cost of its operations. Where in most developed economies the logistics cost varies between 8% and 10% of GDP, in India, it is 14%. Nevertheless, the current national logistics policy aims to bring this number at par with the global average in the coming years.
Coming to the global ranking, India was in the 44th position in 2018 in the World Bank Logistics Performance Index based on its logistics performance. So, to look at the whole picture, there is much scope for improvement in the logistics sector which can be possible through a more unified environment as opposed to its fragmented condition, and also by reducing the overall cost.
How Can the Policy Help to Improve Logistics and Reduce Costs?
A logistics policy is an essential tool for improving logistics and reducing costs. In order to boost the nation’s logistics sector for the flow of products, Prime Minister Narendra Modi unveiled the National Logistics Policy (NLP) on his 72nd birthday with the following objectives:
- Optimise transportation: Transportation may be made more efficient by using the most economical and effective methods, such as the road, rail, air, or sea, as per logistics strategy. The policy can also help cut transportation costs by consolidating shipments, optimising route planning, and introducing modern logistics technology such as real-time tracking systems.
- Improve inventory management: A well-designed logistics policy can help improve inventory management by reducing excess inventory, ensuring timely delivery, and optimising stock levels to prevent stockouts. This can lead to significant cost saving by minimising inventory holding costs, reducing obsolescence, and avoiding lost sales due to stockouts.
- Enhance supply chain visibility: The logistics policy can help improve supply chain visibility by requiring real-time tracking of shipments, timely communication of delays and disruptions, and the use of advanced analytics tools to identify potential bottlenecks and inefficiencies in the supply chain. This can help reduce lead times, improve customer satisfaction, and minimise costly disruptions.
- Unified logistics environment: Ease of Logistics (ELOG), Integration of Digital System (IDS), and Unified Logistics Interface Platform (ULIP) are among the aspects of NLP. The ULIP, according to the PM, is anticipated to consolidate all digital services pertaining to the transportation industry under a single interface. In other words, it will enable data sharing with commercial actors as well as integration with already-existing ministry data sources.
Success Strategies for Shaping the Future of Logistics
The National Logistics Policy (NLP) aims to address the challenges faced by the logistics sector in India and provide a framework for the development of the sector. Its key components are the establishment of important goals, such as bringing India’s logistics costs down to parity with international benchmarks by 2030, moving it up the Logistics Performance Index rankings to the top 25 countries from its current position, and developing a decision making system based on real-time data to create a more productive and efficient logistics ecosystem.
