National Logistics Policy!
PM Modi has just launched the next big thing after UPI which will revolutionise Indian logistics industry. Here is how it will assist India in becoming a $5 trillion economy:
The economic development of any country is directly related to its infrastructure development.
So, on August 15, last year, India announced the launch of a Rs.100 lakh crore national infrastructure plan.
So pumping in so much money makes sense!!
You see, good infrastructure encourages more manufacturing.
For quite some time, China has been referred to as “the world’s factory.”
In fact, its exports in 2019 totaled $2.5 trillion! Almost equal to India’s GDP last year.
However, the Covid supply chain, stricter environmental laws, and increased import tariffs by the United States have worn out the global factory and brought attention to India.
India recognized this and devised a tech-enabled master plan — National Logistics Policy (NLP).
Why Government Implemented this Policy?
This policy was implemented to revamp, digitize, and revolutionize logistics, as the name implies.
Logistics, you see, includes facilities that are critical to trade,it includes transportation, storage, and government services such as licensing and customs and the smoother the transportation of goods within the country, the greater the boost to the trading sector.
According to one study, logistics costs account for about 13-14% of GDP in India.
That is nearly double what it costs in developed countries. In India, logistics is accompanied by red tape and bureaucracy.
Who Governed Logistics Sector?
In fact, this sector is governed by approximately 20 government agencies and 40 government partner agencies.
And we’ve all seen how difficult it can be to streamline coordination between these groups.
Something had to be done to bring all of these agencies together and provide a common interface.
Does this sound familiar?
Yes, it’s the UPI logistics moment.
Unsurprisingly, this aspect of NLP is referred to as ULIP (Unified Logistics Interface Platform).
What is ULIP?
ULIP aims to consolidate all digital transportation services into a single portal.
This will help ease manufacturers and exporters of all the time-consuming procedures, they won’t have to go back and forth knocking on doors to obtain licences or paper clearances.
How It Works?
Simply submit the papers through the portal to complete the work.You see, the portal would also provide real-time data and each step of the current consignment can be easily tracked.
This would allow for shorter, more accurate delivery times as well as maximum utilisation of freight vehicles.
Let me explain in simple words:
You see, goods movement does not have to be limited to a single mode of transport.
It can be multi-modal, it means that it can be transported via various modes of transportation such as road, rail, and air.
Moving goods via these various modes frequently causes delays in final shipment delivery because of miscommunication between various agencies. This frequently raises logistics costs.
With real-time data, all parties involved would be aware of the exact state of the consignment and they can also determine whether a freight vehicle is returning empty or not at full capacity.
This can help ensure that all modes of transportation are fully utilized at all times, reducing losses.
In short, ULIP will serve as a one-stop shop for logistics. NLP also mentions an E-Log service (Ease of Logistics).
Who will be benefited from this new policy?
This will typically help the exporters and manufacturers to resolve operational issues by directly reaching out to the government. The government also has plans for building logistics parks in the NLP which would provide warehousing facilities and multi-modal connectivity.
Anyone can use the warehouse for storage purpose as and when available and use it for distribution as and when required.
Focus of the National Logistics Policy!
This policy emphasises cooperation and data-driven decision making. But none of this would be useful if transportation infrastructure was inadequate.
The Bharatmala project, announced in 2015, envisions the construction of highways covering approximately 83000 km of land! This project was supposed to be finished by fiscal year 2022.
However, only 23% of the work has been completed to date, the deadline has been pushed back by 6 years, and the project cost has nearly tripled.
Land acquisition issues, pandemic-related delays, and higher raw material costs have all contributed to this and, of course, poor communication between the states and the federal government. It is impossible to reduce logistics costs without proper connectivity and better roads.
Slow freight trains and underdeveloped ports put additional strain on road transportation. Which, by the way, is the most expensive mode of transportation because it is impossible to transport a large quantity at once.
So, while NLP appears to be promising and will likely resolve many long-standing issues, it is only one side of this story.
What’s your your view? Let me know in comment!