National Logistics Policy

❖ Key Points:

The National Logistics Policy (NLP), which will be rolled out on

September 17, will play a big role in providing a boost to the logistics
sector in India.

The upcoming policy is not only expected to streamline rules and

address supply-side constraints but will also help provide a roadmap
to reduce fuel costs and lower logistics costs.

• What is the policy all about?

The Central government has been working on the National Logistics

Policy for three years. The commerce ministry released a draft
logistics policy for consultation in 2019, but it was delayed by the
Covid-19 pandemic.

The policy is expected to bring down the logistics cost, which is as

high as 14-15 percent of India's GDP, to around 8 percent of GDP in
the next five years.

It will also provide a roadmap to reduce India's high dependence on

road transport for cargo movement and switch to a mix of rail,
shipping, road, and air transport.

As part of the policy, the government plans to make India one of the
top 25 countries in terms of the Logistics Performance Index by 2030.
 • What are the expected key features of the national logistics
policy?

The policy will include four major steps in order to bring Indian
logistics on par with the global benchmark. These four steps
include Integration of Digital Systems, starting a Unified Logistics
interface Platform (ULIP), improving Ease of Logistics (ELOG), and
setting up a System Improvement Group (SIG).

The policy aims to reduce transportation costs from 6 percent of GDP

to 4 percent. Similarly, warehousing costs will be brought down from
3.5 percent of GDP to 2.5 percent. Inventory costs will be reduced
from 2.5 of GDP to 1 percent and order processing/admin costs will be
cut from 1 percent of GDP to 0.5 percent.

• How will the NLP promote the use of technology in

logistics?

The NLP will take various steps to promote the use of technology in
the logistics sector in India.

One such step includes the setting up of a Unified Logistics interface

Platform (ULIP) which will provide a single window e-logistics market.

ULIP will integrate seven ministries on one platform to provide

logistics companies with information about cargo movement in the
country.

The ULIP platform will provide logistics companies, importers, and

exporter’s data on their cargo movement across the country and will
also help provide cargo movement clearances.

The policy will also promote the use of artificial intelligence and
block chain in India, and help to integrate India's large unorganized
logistics market.
The NLP also aims to create a data analytics centre for driving greater
transparency and continuous monitoring of key logistics metrics.

• How will the NLP improve coordination between ministries?

The NLP will set up a Network Planning Group (NPG) and a Service
Improvement Group (SIG) to improve coordination across ministries.

The Network Planning Group will be made up of planning heads from

the Ministry of Railway, Ministry of Road, Transport &
Highways, Ministry of Ports, Shipping and Waterways, Ministry of Civil
Aviation, Ministry of Petroleum & Natural Gas, Ministry of Power&
Ministry of New and Renewable Energy and Department of
Telecommunications.

While the SIG will include members of the NPG and members from
the Ministry of Housing and Urban Affairs (MOHUA), Department of
Revenue (CBIC and GSTN), Department of Commerce, DPIIT and
any other co-opted member.

• How will the NLP increase the participation of state

governments in the logistics industry?

Under the policy, every state in India will have to set up a State
Logistics Coordination Committee/Cell.

The policy will also annually review the performance of every

state through the Logistics Ease across Different States (LEADS)
index.

The central government will also let states develop their logistics
ecosystems and provide a roadmap for improving logistics efficiency.

The SIG will also carry out the annual LEADS performance index of
states and union territories in India.
The agency will work closely with the State Logistics Coordination
Committee / Cell and prepare a comprehensive annual State
Engagement Report covering the above-mentioned aspects.

WHAT ARE THE FOCUS AREAS?

According to several reports, PM Modi is expected to touch upon four main steps:

1. Integration of Digital System (IDS): This system will look forward to integrating
30 different systems of seven different departments, which are road transport, railway,
customs, aviation, foreign trade, and commerce ministries. The digital data from these
departments will be integrated under IDS. This will directly affect shorter cargo
movement in a positive way.

2. Unified Logistics Interface Platform (ULIP): This system will monitor smooth
cargo movement.
3. EASE OF LOGISTICS (ELOG):
Under this, the new policy will simplify the rules, which is expected to simplify basic
business.
4. SYSTEM IMPROVEMENT GROUP (SIG):
This system will be used to monitor all logistics-related projects regularly and will
facilitate the removal of any hurdle.

An empowered group of secretaries (EGoS), constituted under the PM Gati Shakti,

would monitor and review the implementation of the policy. A service improvement
group would also be constituted for resolution of issues faced by the users.