Date: 21/09/2022

Relevance: GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment; Infrastructure: Energy, Ports, Roads, Airports, and Railways etc.

Key Phrases: National Logistics Policy (NLP), Logistics Sector in India, Transportation in India, National Infrastructure Pipeline (NIP), PM Gati Shakti,ULIP (Unified Logistics Interface Platform)

Context:

• Recently the government announced the National Logistics Policy (NLP) which is designed to complement the focus on infrastructure development with policy interventions and solutions for efficient and effective utilization of logistics infrastructure.

Background:

• As a continent-size economy, efficient logistics and connectivity are critical for India’s economic competitiveness.
• Unlike other large countries like China and Brazil, India’s economic activity is not centred on coastal regions and ports, and its growth is underpinned by economic activity in the hinterland.
• Thus, efficient logistics is needed for effective access between hinterland and gateway ports and airports that connect Indian businesses with the global economy.
• To materialize these objectives the Indian government has launched many initiatives such as Prime Minister Gati Shakti (PMGS) Master Plan and the latest is the National Logistics Policy (NLP)

Key focus areas of the National Logistics Policy

• Procedural and regulatory reform and on enabling digital solutions to address impediments to efficient logistics operations.
• It will enhance coordination and collaboration between ministries and with states by overcoming challenges of multiplicity of laws and regulations.
• Targeted interventions for the optimization of capacity utilization of logistics infrastructure
• It will push greater standardization in logistics equipment and facilities that will lead to enhanced interoperability across the logistics chain, especially between different modes.
  • For instance, adoption of standardized multi-use containers for the movement of food grains and fertilizer would allow greater interoperability between rail and road, and eliminate the need for specialized wagons for the rail movement of such products.
  • Given that the Food Corporation of India and the Department of Fertilizer move large volumes of cargo across the country, coordination between them can lead to cross-utilization resources and thus making them cost effective.

ULIP (Unified Logistics Interface Platform) and the NLP

• The NLP aims to make modern logistics services accessible to even small and medium entrepreneurs and well acknowledges the critical role of digitization in this regard
• ULIP will facilitate minimal documentation, real-time information and faster movement of goods by providing quality data from various data sets of different ministries and departments such as Vahan Saarthi of Highway Ministry, ICEGATE of Customs Department, FASTag of NPCI etc.
• This can help in finding the most appropriate mix of the fleet, cost-effective and the most optimal route using ULIP Data and AI-driven route optimization solutions.
• Combining ULIP Data with new age tech such Artificial Intelligence and Machine Learning tools can lead to a prediction of freight trends, supply demand gaps etc.
  • Based on such data, interventions can be done both by government and private entities for better results.

Interaction with States is essential

• The policy focuses on coordination and co-operation with states because states are responsible for enforcement and administration of laws and regulations that govern key logistics activities such as road transport and warehousing.
• States play a critical role in the development of modern logistics agglomeration centres such as Multi-Modal Logistics Parks and warehousing zones.
• The process of cooperative federalism envisaged in the NLP will help drive greater standardization in administrative processes and enforcement across States.

Key Challenges in India’s Logistics Sector

• Lack of planning and synergy amongst the various ministries leads to infrastructure being under-utilized, outdated, or congested by the time it is finally completed.
• Dearth of Freight Data:
  • There is a serious issue of data unavailability on predictive freight rate trends, supply-demand gaps, truck utilization factors, corridor congestion data etc.
  • This hinders planning and execution and a vicious cycle is perpetuated.
• Environmental and Economic issues: Many projects are delayed due to environmental clearances or in absence of funds.
• Lack of last mile connectivity has resulted in a lower share of Rail vis-à-vis Road transport which increases logistics costs.
• High Fuel Costs are the biggest deterrent as it leads to increased transportation costs to the shippers making it less viable and thus prompting lesser investments.
• The lack of coordination between the Union and State executing bodies may result in the non-utilization of newly created public infrastructure and frequent conflicts.

How will the NLP impact the logistics sector?

• The provisions of NLP would help improve ease of doing business on the ground through
  • One-stop transparent approvals for warehouse and logistics park projects.
  • Seamless movement of trucks with minimal stoppages and inspection
• An independent ranking of logistics performance of States in the form of the annual Logistics Ease Across Different States (LEADS) will be carried out.
  • This would encourage States to bring greater focus on logistics related issues.
• Development of state and city-specific master logistics plans will help and complement the national master plan development in the PMGS Master Plan.
• To overcome the skewed share of a few selected sectors in logistics-related activities sector-specific logistics plans will be developed and their integration with the national and State logistics plans will be carried out
  • It will ensure that the critical logistics needs of important sectors are taken care of.
  • This would also help reduce the cost of these key commodities and directly benefit the farmers and businesses.

Conclusion

• India’s logistics sector suffers from a skewed intermodal mix and a 2020 data show that most of the freight in India is transported through road (about 70% inland operations) and rail’s share stood at merely 18 per cent.
• Recently the International Monetary Fund (IMF) ranked India 127th among 162 countries in terms of road transport speed which shows India’s logistics sector's dire state.
• In such times the NLP, launched with lofty objectives of transforming India’s logistics sector can be a game changer if implemented in its true spirit and the government ensures coordination and collaboration between a large number of central and state level government departments and agencies to implement them.

Source: The Hindu BL

Mains Question:

Q. The National Logistics Policy (NLP) has the potential to address long standing issues of India’s logistics sector if implemented in its true spirit, Elucidate. Also write a short note on provisions of the National Logistics Policy (NLP) (250 words).