Logistics Costs A Low-hanging Fruit, Can Come Down To Single Digit With Some Effort: PM Modi

The country's logistics costs current stand at 14 per cent of the GDP

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On his birthday today, Prime Minister Narendra Modi launched the National Logistics Policy (NLP) at Vigyan Bhawan, New Delhi, to address the issues of high cost and inefficiency in the Indian logistics sector.

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For India to witness quick last-mile delivery, an end to transport-related difficulties, cost-saving by manufacturers and industrialists, and the avoidance of delays-induced wastage of agro products, we have been working towards a unified solution, which has come in the form of the NLP, said Modi as he launched the policy.

He added that the country's logistics costs, which currently stand at 14 per cent of the GDP, are a low-hanging fruit, which can be brought down to a single digit with just some concerted effort in the right direction.

Aiming to improve the ease of living as well as doing business, the NLP will lay down a cross-sectoral and multi-jurisdictional framework for the development of the full logistics ecosystem.

The need for such a policy arose due to such costs being higher in India than in other developed economies. "It is imperative to reduce the logistics cost for improving the competitiveness of Indian goods both in domestic as well as export markets," stated a release by the government on Friday. The policy also targets limiting the losses that occur while transporting perishable goods by improving warehousing and cold chain efficiency.

The Indian logistics sector is a highly complex one, engaging over 20 government agencies, 37 export promotion councils, 12 million employment base, 36 logistics services and 200 shipping agencies, among several other stakeholders. As per estimates, the Indian logistics sector will be worth around $215 billion in the next two years compared to about $160 billion at present.

"The Covid-19 pandemic allowed the Indian logistics sector's strength to be displayed before the world: whether it was food grains or essential goods, everything reached the citizens timely," said Union commerce minister Piyush Goyal at the launch. Listing various policies aimed at improving the country's transport infrastructure, such as UDAN, National Infrastructure Pipeline, Bharat Mala, Sagar Mala, PM Gati Shakti, etc., Goyal stated that the NLP will work with the strength of a "double engine" to transform the sector.

"When the PM Gati Shakti policy was launched, India became the first and only country in the world to bring all infrastructural projects under one digital framework. The NLP will create a paperless supply chain that is completely digitally connected...All livelihood entrepreneurs, especially small transporters and the medium companies to be digitally linked and grow together...This will increase our export competitiveness and reduce our carbon footprint," said R Dinesh, managing director, TVS Supply Chain Solutions, at the launch.

"In a country like India, where road transport forms the backbone of logistics, an integrated infrastructure will enhance seamless connectivity across all modes of transportation," said Sudhir Unnikrishnan, SVP and managing director, Blume Global India, as he welcomed the policy post its launch.

Manual clearance processes at ports for export and import operations take considerable time. "This tends to impact the cost of executing international logistics operations and acts as a barrier to providing Indian consumers with that 'fast' delivery experience. Policies that mandate a certain degree of automation in customs clearance processes will make a winning difference for logistics-powered businesses," added Dhruv Agrawal, COO and co-founder, Shipsy.