Home / Opinion / Views /  Mint Explainer: National Logistics Policy, and the need for freight-smart cities

Seamless movement of goods, services and people is the bedrock of any developed economy. Without a vibrant logistics backbone, India too can’t aspire to be an economic superpower by 2047, and the Narendra Modi government recognizes that. About a year after unveiling the Gati Shakti programme for a holistic, integrated development of the country’s infrastructure, Prime Minister Modi has now unveiled the National Logistics Policy to provide an overarching vision for India’s logistics sector. It requires painstaking attention to detail, planning and execution. But remember, in recent decades, Indian cities — the economic nerve centres — have seen an explosion in unplanned growth, and it’ll be a big obstacle in crafting a logistics superstructure for the country. In the long run, India needs to focus on city logistics — still a developing concept globally – and build “freight-smart cities".

What is the National Logistics Policy?

Essentially, Team Modi has shaped a two-pronged blueprint for a logistics superhighway of sorts in India. The first step was the PM Gati Shakti – National Master Plan for Multi-modal Connectivity, unveiled in October last year. The National Logistics Policy is the next step forward, a logical progression of sorts. It’s all supposed to add up.

The National Logistics Policy will roll out the broader vision for India’s logistics backbone.
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The National Logistics Policy will roll out the broader vision for India’s logistics backbone.

Gati Shakti is intended to be a digital platform for an integrated and coordinated development of infrastructure-connectivity projects. It targets “seamless connectivity for movement of people, goods and services from one mode of transport to another".

Now, part two. The National Logistics Policy will roll out the broader vision for India’s logistics backbone, for efficient delivery of services – processes, digital systems and regulatory framework – and managing human resources, across roadways, railways, waterways and airways.

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What does the policy set out to achieve?

The policy essentially sets out three objectives for itself. Cut down logistics cost in India to global standards by 2030; put India in the top 25 countries on Logistics Performance Index ranking by 2030; and nurse a data-driven support mechanism for an efficient logistics ecosystem.

The Modi government has an ambitious agenda for the policy. From standardization of physical assets to supporting logistics plans of states and cross-border trade, it’s a long list. The PM spelt out his vision for logistics at the launch of the new policy: “ … to ensure quick last-mile delivery, end transport-related challenges, save time and money of the manufacturers, prevent wastage of the agro-products …"

What are the challenges in developing a logistics ecosystem?

Globally, grafting a logistics superstructure on cities has been a challenge. Urban planning has not focused adequately on the need to build freight corridors in and around cities. In fact, some studies have shown modern urban planning has very often been in conflict with the needs of a logistics backbone. Today, cities are encouraged to be denser and grow vertically, but that poses challenges in freight movement and deliveries, with a scramble for parking slots.

Very simply, not enough thought has gone into building freight-smart cities — in India, and globally. In fact, the problem gets magnified in India, with its crowded, unplanned urban centres. The logistics challenge in India — and many developing economies — is essentially two-fold.

First, the haphazard growth of urban centres, with cities expanding chaotically in all directions (known as an “urban sprawl" globally). It stretches the resources of urban local bodies, making it almost impossible to deliver quality transport infrastructure to all corners.

Second, urban planning is almost non-existent in large parts of urban India. As Mint wrote earlier, almost half of the new urban settlements in India are still governed as “rural entities".

So, as India tries to plan its cities better, it must give greater thought to building an urban logistics backbone that cuts transportation costs and delivery time of goods, services and people.

India, and the world, must focus on “city logistics"

Freight traffic in global urban centres needs to be better planned and managed. Transport planning and logistics in urban centres is called city logistics. It’s not a new concept, but has only now emerged as a focus area in pockets of the developed world.

So, adoption of city logistics has added another dimension to urban planning. As a part of it, trucks can only be run on specific routes. Then, there can be designated places for parking, loading and unloading of freight containers: from curb-side use to off-street facilities. And building freight terminals for seamless multi-modal distribution of goods.

In India, too, an urbanization explosion amid rapid economic growth, with an exponential surge in first- and last-mile freight movements, has added to congestion and pollution in cities. Demand for urban freight is expected to rise by 140% over the next 10 years, according to the Ministry of Commerce and Industry. Last-mile freight movement in Indian cities alone adds up to 50% of total logistics costs in India’s growing e-commerce supply chains.

In 2021, the Modi government began a debate with states and various stakeholders on the need for freight-smart cities to cut logistics costs and delivery times of goods and services. Developing truck routes and peri-urban freight centres, night-time deliveries, use of intelligent transportation systems and modern technologies, promoting electrification of urban freight, parcel delivery terminals, etc. are among the various options being debated at the moment by the Centre.

The Modi government’s thrust remains on speeding up India’s economic growth. It’s aware that India will not deliver on its potential without a vibrant logistics sector.

Elsewhere in Mint

In Opinion, Pramit Bhattacharya argues India needs to move a 'jugaad’ method to a reliable gauge of services activity. Alok Sheel makes a stylized case for monarchy in rhyming verse. Parmy Olson draws three sobering lessons from Larry Page’s flying car failure. Long Story weighs Jaggi's challenge to Ola and Uber.

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