View from India: Logistics carriers are economic lifeline of the country

Developed by the Commerce and Industry Ministry, the goal of the National Logistics Policy (NLP) is to make the country a logistics powerhouse. The policy has four features: Integration of Digital System (IDS); Unified Logistics Interface Platform (ULIP); Ease of Logistics (ELOG); and System Improvement Group (SIG).

IDS aims to integrate 30 different systems of seven departments. This includes data from the road transport, railways, customs, aviation and commerce departments. ULIP is expected to bring all digital services related to the transportation sector into a single portal. When it happens, it may free exporters from a host of cumbersome processes.

Likewise, Ease of Logistics (ELOG) Services has been initiated for industry associations to resolve issues by reaching out to the government. To illustrate, a manufacturer has to apply for different licences in different districts for business. Exporters also have to go through a long process like compiling shipping bill numbers, railway consignment numbers and E-way bill numbers to track and trace their goods. All this could be viewed as measures to hasten the last mile delivery, as it could save time and close gaps in the supply chains. This could help give better visibility to all those in the ecosystem and reduce losses caused during transportation. SIG’s role is to monitor all logistics-related projects regularly.

This could be a holistic effort to increase the efficiencies of all aspects of the logistics value chain, reasons Jagannarayan Padmanabhan, director and practice leader for transport and logistics at CRISIL. “Over the past five fiscals, the government has invested close to 15 lakh crore (15 trillion) rupees in augmenting hard infrastructure such as roads, rail, ports and airports. While this trend is expected to continue, streamlining of the functional aspects such as ease of movement, common interfaces/platforms for service providers and users, and skill development focused on the logistics vocations was imperative. The new policy clearly aims to achieve these.”

The right implementation and widespread adoption may help structurally reduce logistics costs and make a material difference to the growth of India’s manufacturing and services sectors. The policy should hopefully reduce logistics expenses from 15 per cent of India’s GDP to 8 per cent in five years.

Prime Minister (PM) Narendra Modi has stressed the need to adopt technology and implement blockchain and AI to strengthen the value chain of the logistics sector. Other initiatives include paperless EXIM trade process through e-sanchit, faceless assessment for customs and provisions for e-way bills.

The logistics sector in India is big but also unorganised and fragmented. There are several ongoing efforts to improve the logistics environment. GST or Goods and Services Tax could be viewed as a unified tax system probably smoothing the issues of the logistics sector. The drone policy has been linked to the production linked incentive (PLI) scheme so that it can be used by the logistics sector. NLP was announced after all this fell into place. “From 13-14 per cent logistics cost, we should all aim to bring it to single-digit as soon as possible. This, in a way, is a low-hanging fruit, if we have to become globally competitive,” the Prime Minister emphasised.

The PM has already laid the path for improving the fragmented logistics ecosystem. As for infrastructure, Bharatmala for road, Sagarmala for shipping, and UDAN for aviation. Initiated for multi-modal connectivity, the PM Gati Shakti National Master Plan aims to build the foundation for improving the turnaround times and efficiency of the logistics industry. NLP, the PM pointed out, acts as a pivot to smooth the movement of goods and services, and ease regulatory compliances.

India’s international trade is dependent on logistics. Understandably, 40 air cargo terminals have been built to facilitate exports. Cold storage facilities have been provided at 30 airports and 35 multi-modal logistics hubs are also being set up across the country. As for ports, the average turn-around time of container vessels has come down from 44 hours to 26 hours.

The overall intent is to lower logistics cost, bring transparency to the system and standardise warehousing operations with better infrastructure and regulatory norms. Perhaps the domestic supply chains can become more organised, inter-state trade could flourish and sectors such as healthcare could benefit from this. All this could unfold new job openings. We could look forward to a technologically enabled single-window e-logistics market. Value-adds may be in the form of multimodal logistics parks.