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What is Logistics?

Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption to meet the requirements of customers or corporations. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other consumable items.

What is National Logistics Policy?

National Logistics Policy, a comprehensive effort to address issues of high cost and inefficiency by laying down an overarching interdisciplinary, cross-sectoral, and multi-jurisdictional framework for the development of the entire logistics ecosystem, is yet another step in this direction. It is an endeavor to improve the competitiveness of Indian goods, enhancing economic growth and increasing employment opportunities.

The national logistics policy will clarify the roles of the Union government, state governments, and key regulators. It will create a single-window e-logistics market and focus on the generation of employment, and skills and making medium and small enterprises competitive. It will focus on ease of doing business.

It has been the vision of the Prime Minister to develop world-class modern infrastructure through the integration of all stakeholders in holistic planning and implementation so that efficiency and synergy are achieved in the execution of the project. The PM GatiShakti – National Master Plan for muti-modal connectivity – launched by the Prime Minister last year, was a pioneering step in this direction. PM GatiShakti will get further boost and complementarity with the launch of the National Logistics Policy.

What is the Vision of Policy?

The vision of the proposed policy is to drive economic growth and the business competitiveness of the country through an integrated, seamless, efficient, reliable, green, sustainable, and cost-effective logistics network leveraging best-in-class technology, processes, and skilled manpower.

What will the policy do?

While the details will emerge only after the policy is launched, the government is focusing on processes such as re-engineering, digitization, and multi-modal transport to bring down logistics costs and improve efficiency. The government aims to reduce indirect logistics costs by up to 10 percent, which the government says will lead to an increase in exports of 5-8 percent.

The government has already been trying to improve India’s logistic operations and infrastructure under initiatives like the construction of Multimodal Logistics Parks, the creation of the Unified Logistics Interface Platform (ULIP), and investment under the PM GatiShakti National Master Plan as announced in this year’s Budget speech.

How is helpful for Export or Import?

By simplifying documentation for exports and imports through  digitization, the Department of Revenue, and CBIC have taken several initiatives like:

(i) SWIFT ( Single Window Interface For Trade )

(ii) Adoption of Digital Signature

(iii) 24×7 Customs Clearance – for facilitated Bills of Entry and factory stuffed containers and goods exported under free Shipping Bills at select  ports

(iv) Import Data Processing and Management System (IDPMS) – jointly launched with RBI to facilitate efficient data processing for payment of imports and effective monitoring

(v) E-Sanchit

(vi) Two new IT  Modules ICEDASH (Ease of doing business monitoring dashboard) and ATITHI app for electronic filing by passengers for baggage

(vii) PCS 1X which is a platform for port-related processes developed by Indian Ports Association.

How will it boost trade and business facilitation matters?

As per the draft policy, the Central government will create a single point of reference for all logistics and trade facilitation matters, reducing costs for the logistics sector to 10 percent in five years. The logistics sector is estimated at 13-14 percent of GDP.

Whom will the policy affect?

The policy will directly affect India’s logistics industry. The industry consists of over 20 government agencies along with 40 partner government agencies. Other stakeholders include 37 export promotion councils, 200 shipping agencies, 36 logistics services, 129 inland container depots, 168 container freight stations, and 50 IT ecosystems, banks, and insurance agencies. In total, the industry handles over 10,000 commodities spread across 500 certifications with a $160 billion market size.

A total of 22 million people are estimated to be employed in the industry. Apart from directly affecting the logistics industry, the policy will affect every industry that has to move goods physically from one place to another. As logistics costs come down and efficiency increases, companies will be able to earn more through increased margins.

How new logistics plan implemented?

The Policy will be implemented through a Comprehensive Logistics Action Plan (CLAP)

1. Integrated Digital Logistics Systems: Develop a system of unified logistics interface to link multiple data sources and develop cross-sectoral use cases for logistics stakeholders.

2. Standardization of physical assets & benchmarking of service quality standards: Enhance interoperability, minimize handling risks, undertake process optimization, and improve ease of doing business, through standardization of physical assets and benchmarking of service quality standards in logistics including transportation infrastructure (fixed and rolling), terminal handling, warehousing, temperature-controlled logistics, packaging, etc.

3. Logistics Human Resources Development and Capacity Building: Develop an overarching logistics human resource strategy and under its guiding principles, line ministries to develop action plans to address skill development-related and internal capacity building challenges in the respective sector.

4. State Engagement: Provide support for the development of state/city level logistics plans, set up an institutional framework to take action at the city/state level, measure and monitor action by states and rank them.

5. EXIM (Export-Import) Logistics: Addressing infrastructure and procedural gaps in India’s EXIM connectivity and creating an efficient and reliable logistics network, with transparent and streamlined cross-border trade facilitation, for improved trade competitiveness and greater integration of India with regional and global value chains.

6. Service Improvement framework: Improving regulatory interface to enable seamlessness between sectors, promote standardization, formalization, and inter-operability; eliminate fragmentation in documentation, formats, processes, and liability regimes; reduce gaps in regulatory architecture.

7. Sectoral Plan for Efficient Logistics: Sectoral Plans for Efficient Logistics (SPEL) aligned with PM GatiShakti, will be developed for each sector with underlying philosophies of inter-operability, resiliency, sustainability, and innovation. Specifically, SPEL would (i) address logistics issues about infrastructure, processes, digital improvements, policies, regulatory reforms, and capacity building for a better workforce, and ii) prioritize cross-sectoral cooperation to complement and not duplicate efforts and focus on optimization of a modal mix.

Facilitation of Development of Logistics Parks: Logistics parks (eg. Multi Modal Logistics Parks, Air Freight Stations, Inland Container Depots, Container Freight Stations, cargo terminals, etc.) are hubs for intermediary activities (storage, handling, value addition, inter-modal transfers, etc.) in the supply chain connected by a transportation network. It is envisaged to take the following steps to facilitate the development of logistics parks:

Though there is no official estimation of logistics cost for India, some private institutions have estimated the logistics cost to be 13 to 14 percent of the GDP. The proposed policy aims to reduce this to 9 -10 percent of the GDP.

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April 2024