Home / Economy / How the logistics policy will speed up lumbering freight sector

The government will announce the National Logistics Policy (NLP) on 17 September, aiming to bring down logistics costs and address challenges plaguing importers and exporters. Mint examines how the policy could accelerate freight movement.

What does the policy aim to achieve?

India’s logistics sector is largely unorganized and fragmented, which is why the country’s logistics costs are as high as 14-15% of the GDP, against 7-8% in developed nations such as the Singapore and the US, who leverage it to boost exports. The NLP aims to bring down India’s logistics cost to 8% in the next five years. As per some estimates, about 16% of India’s agri-production is wasted at different stages of the supply chain. The policy seeks to limit losses incurred while transporting perishable commodities to under 5% by improving the warehouse facilities and cold chain efficiency.

What role will technology play?

The NLP will aim to harness technologies such as AI and blockchain. It aims to create a data analytics centre for driving greater transparency and continuous monitoring of key logistics metrics. Currently, several certifications are required, slowing the entire process. Moreover, due to factors such as limited capacity and availability of warehouses, the cost of transaction increases. Under NLP, a single window portal will be created, where service providers such as warehousing providers, shipping experts, transporters, customs brokers, and various governmental agencies will be unified.

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Will it boost cooperation between ministries?

That’s the expectation. Currently, the logistics value chain is managed by several ministries—road transport and highways, shipping, railways, and civil aviation. Agencies like the Central Drug Standard Control Organization and the Food Safety and Standard Authority of India provide clearances. The NLP could enhance their integration at the central level.

What about reducing the carbon footprint?

The draft logistics policy lays emphasis on the shift to more energy-efficient means of transportation, as well as the use of greener fuels which could reduce the supply chain’s carbon footprint. Moreover, the draft policy, released earlier, emphasized creating regulations for controlling vehicular noise, emissions, and wastage. The new logistics policy also aims to incorporate green principles in the functioning of warehouses which contribute to nearly 10% of the logistics costs.

Will it change India’s commodity transport?

The proposed policy aims to focus on the transport of crucial commodities such as coal, steel, iron ore, food grains, steel, cement, fruits and vegetables. The current logistical network for transporting them is mainly confined to regional clusters. The NLP could help establish a link between the place of origin, and destination place and integrate the supply on a national level. The draft also proposes identification of the right mode of transport for each of these commodities to minimise losses during transport.

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