Accelerated movement: logistics sector high on delivery, low on cost

(Source – The Hindu, International Edition – Page No. – 13)

 National Logistics Policy (NLP):

• The Indian government launched the National Logistics Policy (NLP) in 2022 to improve the logistics sector’s efficiency and reduce costs.
• India’s logistics performance improved significantly, rising to 38th place out of 139 nations in the World Bank Logistics Performance Index in 2023.
• The policy aims to reduce logistics costs, which currently stand between 10-14% of the country’s GDP.

Key Government Initiatives

• PM Gati Shakti National Master Plan:
  • Launched in 2021, this initiative aims to boost infrastructure and ensure faster, more efficient logistics across the country.
  • It focuses on improving coordination between various ministries for better infrastructure planning and execution.
• Unified Logistics Interface Platform (ULIP):
  • ULIP was introduced as a digital platform to streamline logistics operations by enabling real-time data exchange.
  • As of 2023, over 600 entities have registered on ULIP, and 57 applications have gone live for logistics operations like cross-border trade and last-mile delivery optimization.
• Electrification and Port Policy:
  • Short railway lines connecting container depots and freight stations have been electrified to speed up goods movement.
  • A new Marine Policy under the NLP was launched to improve port-related logistics.

Impact of Goods and Services Tax (GST)

• GST’s Role in Reducing Logistics Costs:
  • The implementation of GST has helped reduce logistics costs by minimizing waiting times at state borders.
  • Trucks now travel an average distance of 300-325 km, up from 225 km, thanks to reduced delays, lowering transportation costs.
• Logistics Cost Reduction:
  • Between FY14 and FY22, logistics costs in India declined by 0.8-0.9 percentage points of GDP, according to a report by the National Council of Applied Economic Research (NCAER).

Digitalization and Infrastructure Development

• Digitalization of the Logistics Sector:
  • Over 600 entities registered on ULIP, with 57 live applications enhancing the digital infrastructure of the logistics sector.
  • These applications help in various logistics functions, including process automation, document digitization, and data exchange.
• Infrastructure Investments:
  • Increased capital expenditure in 2024 supports growth in the sector, including improvements in rail, road, and waterways.
  • Multi-modal connectivity is being emphasized, with an expansion in the use of rail and waterway freight alongside highway construction.

Future Outlook and Growth

• Sector Expansion:
  • The logistics sector grew at a rate of 12% in 2024, driven by e-commerce, increased domestic consumption, and government-backed initiatives like Gati Shakti and NLP.
  • The sector, valued at $250 billion, contributes 14% to India’s GDP and is expected to continue its growth trajectory.
• Focus on Skilling: There is a need for better workforce training to handle the growing demands of the logistics sector and to ensure efficient operations.

Conclusion

• The logistics sector in India is evolving rapidly due to government reforms, digitalization, and infrastructure improvements.
• With continued investments and policy support, the sector is well-positioned for significant growth in the coming years.