The government will announce the National Logistics Policy (NLP) this week, aiming to bring down logistics costs and address challenges plaguing importers and exporters.

What is Logistics?

• Logistics refers to the overall process of managing how resources are acquired, stored, and transported to their final destination.
• It involves identifying prospective distributors and suppliers and determining their effectiveness and accessibility.

Why need a logistics policy?

• Organizing and consolidating the sector: India’s logistics sector is largely unorganized and fragmented.
• Reducing logistics cost: This 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.
• Preventing waste of perishable items: As per some estimates in India, about 16% of agri-production is wasted at different stages of the supply chain.
• Warehousing development: Moreover, due to factors such as limited capacity and availability of warehouses, the cost of transaction increases.
• Multi-modal integration: The new policy is going about simplification, technology and will have a multimodal approach that will combine rail, water, and air — all modes of transport.

What role will technology play?

• Advanced analytics: 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.
• Single window portal: Under NLP, a portal will be created, where service providers such as warehousing providers, shipping experts, transporters, customs brokers, and various governmental agencies will be unified.

Will it boost cooperation between ministries?

• Unifying multiple departments: Currently, the logistics value chain is managed by several ministries—road transport and highways, shipping, railways, and civil aviation.
• Single-point clearances: Agencies like the Central Drug Standard Control Organization and the Food Safety and Standard Authority of India provide clearances.
• Nationwide integration: The NLP could enhance their integration at the central level.

What about reducing the carbon footprint?

• Energy-efficient transportation: 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.
• Vehicular emission reduction: Moreover, the draft policy, released earlier, emphasized creating regulations for controlling vehicular noise, emissions, and wastage.
• Green warehousing principles: 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?

• Transport of crucial commodities: 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.
• Creating nationwide clusters: The current logistical network for transporting them is mainly confined to regional clusters.
• Integrating national supply-chains: The NLP could help establish a link between the place of origin, and destination place and integrate the supply on a national level.
• Optimum logistics identification: 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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