Logistics companies are in the spotlight following the announcement of the National Logistics Policy (NLP). The policy aims to address challenges faced by different modes of transport including water, air, roads and railways. Here are some of the key highlights of the policy.
High logistic costs
At present, the country’s logistics cost stands at close to 14% of GDP, which is higher compared to global benchmarks. Developed economies like the US, South Korea and Singapore have single digit logistics cost-to-GDP ratio. The policy aims to bring down India’s ratio down to single digits by 2030.
According to the Logistics Performance Index of 2018 published by the World Bank, India was ranked 44th globally in logistics costs. The New Logistics Policy aims to improve the country's ranking and bring it among the top 25 countries by 2030.
Reliance on roadways
Part of the reason for high logistics cost is the over-dependence on road transport, which involves high fuel costs. Road transport accounts for nearly 60% of all transport in the country. Experts believe the policy will facilitate a modal shift in the logistics industry from road transport to railways and waterways, which currently have a low market share.
A single portal
For this, the NLP will work in conjunction with the Sagarmala and Bharatmala schemes to boost waterways and roadways for seamless movement of goods. In addition, the policy will emphasise technology-led growth through the Unified Logistics Interface Platform (ULIP), which will bring all the digital services related to the transportation sector under a single portal.
All in all, the policy is a step in the right direction towards promoting seamless movement of cargo and people. Having said that, effective implementation will hold the key to the success of the policy.
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