4 May 2024 : Daily Answer Writing

Q1) Elaborating upon the significance of the logistics sector, analyse the role of the National Logistics Policy (NLP), 2022 in addressing sectoral challenges.

(250 Words/15 Marks)

ANS

Logistics refers to the process coordinating and moving resources, including materials, equipment, people etc. India ranks 38th in the World Bank’s Logistics Performance Index 2023.

Significance of logistics sector can be seen as:

1. Strong logistics enables quick economic recovery after an economic slump, such as post pandemic recovery.
2. Short time of delivery improves customer experience, improves sales.

E.g., e-commerce, ‘farm to-fork’ food processing sector.

3. Strong logistics network drives country’s export competitiveness.

E.g., ability to leverage China + 1 model of supply chain relocation.

4. It catalyses infrastructure sector’s growth which is employment-intensive.
5. Urban transport infrastructure enables economies of scale, mobilisation of human resource and ease of living.

E.g., Delhi metro or the upcoming RRTS.

Prime Minister launched the National Logistic Policy (NLP) in September 2022 with an aim to bring overhauling changes in logistics sector.

 

The potential of NLP in enhancing the efficiency of logistics ecosystem is as follows:

1. Sectoral plans under the Comprehensive Logistics Action Plan will formalize the highly fragmented logistics industry. It can bring down the logistics cost from the current level of 13- 14% of GDP to single digit figures as seen in most developed countries.
2. Digitalization:
3. a) Unified Logistics Interface Platform (ULIP) will free the exporters from long and cumbersome processes. It will facilitate easy cargo transfer by bringing all the digital services on a single portal.
4. b) Ease of logistics services (E-Logs) and System Improvement Group (SIG) will improve grievance redressal mechanism.
5. Diversification: NLP will shift over-dependence on roads (60%) towards railways (30%) and waterways (5%) through integration of various systems.

E.g., Integrated Digital System (IDS) for cargo movement brings together 30 different systems.

4. Streamlined regulatory framework will give boost to development of integrated infrastructure in conjunction with PM Gati Shakti.

E.g., freight-smart cities near multi-modal logistics parks (MMLPs).

5. It can strengthen cooperative federalism by greater engagement and coordination among states and centre as envisaged under the comprehensive logistics action plan.

 

NLP is a beneficial development. However, further changes are required to address challenges to efficiency of logistics sector in India:

1. Coordination amongst the different central ministries, states and other stakeholders.
2. GST-exemption can be given to ease compliance-burden for smaller players.
3. Cost of financing: Ancillary options for availing finance at discounted rates would be a boost to the policy.
4. Eco-friendly logistics infrastructure like inland waterways has remained under-developed. There is need to focus on the sectoral issues like lack of domestic ship-building industry.
5. There is need for resilient data protection regime to address challenges in regulation of platforms like ULIP and E-Logs for a safe transaction environment.

The government’s push for logistics sector through NLP and various schemes such as FASTag, PM Gati Shakti, Bharatmala, Sagarmala etc., are efforts in the right direction