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 around coastal regions and ports, and its growth is underpinned by economic activity in the hinterland. Thus, the need for efficient logistics servicing the entire country underpins the development of national production networks, not to mention effective access between hinterland and gateway ports and airports that connect Indian businesses with the global economy.
It was with this vision for enhanced connectivity that Prime Minister Narendra Modi unveiled the ambitious Prime Minister Gati Shakti (PMGS) Master Plan on October 13 last year. The National Logistics Policy (NLP) announced on September 17 this year is designed to complement this focus on infrastructure development with policy interventions and solutions for efficient and effective utilisation of logistics infrastructure.
The underlying focus of the NLP is on procedural and regulatory reform and on enabling digital solutions to address impediments to efficient logistics operations. Given the sheer multiplicity of laws and regulations and associated enforcement touchpoints across the logistics chain, this is no mean task. The government must be commended for coming up with this comprehensive policy framework for coordination and collaboration between ministries and with States.
Even more welcome is that the NLP is focused on some critical objectives that are central to transforming the logistics ecosystem. These include targeted interventions for the optimisation of capacity utilisation of logistics infrastructure and driving greater standardisation in logistics equipment and facilities that will lead to enhanced interoperability across the logistics chain, especially between different modes.
For instance, adoption of standardised multi-use containers for the movement of foodgrains and fertiliser would allow greater interoperability between rail and road, and eliminate the need for specialised wagons for the rail movement of such products. Given that the Food Corporation of India and the Department of Fertiliser move large volumes of cargo across the country, coordination between them can lead to cross-utilisation of trucks and railway rolling stock, minimising empty runs and leading to huge cost savings.
Perhaps one of the most important aspects in the NLP is making modern logistics services accessible to even small and medium entrepreneurs. The digitalisation focus in the NLP will play a critical role in helping achieve this objective. The Unified Logistics Interface Portal (ULIP), launched by DPIIT, is developing a digital stack integrating all systems and platforms relating to logistics operations. This will allow service providers, including start-ups, to develop multiple applications to support logistics operations with minimal effort and at low costs. This, in turn, will allow these applications to be made available to users at very low cost, ensuring their adoption by the smallest of players.
Take, for example, the ability to track and trace consignment close to real-time. Currently, only large logistics firms provide such value-added service to their customers for a premium. But ULIP will allow a start-up to leverage connectivity with the National Highway Authorities’ FASTag that would allow near real-time tracking of a truck on its journey, or a rail wagon through the Railways Freight Operations Information System (FOIS), and provide simple mobile-based track-and-trace services.
Interaction with States
The NLP’s commitment to developing institutions of coordination and co-operation with States is significant. 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 standardisation in administrative processes and enforcement across States.
All of these would help improve ease of doing business on the ground. Whether one-stop transparent approvals for warehouse and logistics park projects, or seamless movement of trucks with minimal stoppages and inspection, the NLP hopes to drive reforms in partnership with States to achieve these important goals. The NLP also institutionalises an independent ranking of logistics performance of States in the form of the annual Logistics Ease Across Different States (LEADS). This would be a perfect nudge to States to bring greater focus on logistics related issues.
Another important element in the NLP is the commitment to develop State and city-specific master logistics plans. These would be critical to complement the national master plan development in the PMGS Master Plan.
Sectoral logistics plan is another interesting concept. A few key sectors account for the bulk of logistics-related activities.
Development of sector-specific logistics plans and their integration with the national and State logistics plans would go a long way in ensuring that the critical logistics needs of important sectors are taken care of. This would also help reduce the cost of these key commodities, directly benefiting the pocket books of Indian businesses, farmers and consumers.
However, the actual impact of the NLP would be dependent on the ability of the government to effectively develop the programmes outlined in the policy, and ensure coordination and collaboration between a large number of central and state level government departments and agencies to implement them. If the NLP vision is realised substantially, it can have a transformative effect on India’s competitiveness.
The writer is an independent trade and logistics expert