🤔 Why India Needs A National Logistics Policy
India is all set to become a manufacturing hub but before we do that we need to improve our logistics. The solution: A National Logistics Policy. But will it be enough?
$500 billion (equal to the GDP of UAE).
That’s how much India could add to the global economy if it managed to become the manufacturer of the world.
So to fulfill this dream of ours, we launched several initiatives like Make in India, multiple product linked incentive schemes, startup grants and funds and so much more.
But just like you need to be good at Physics and Maths to take up science, we need to improve both manufacturing and logistics to become a manufacturing hub.
And to make this happen, our government has launched a National Logistics Policy that is set to completely transform this sector.
👀 The Need for National Logistics Policy
First, let's understand what logistics means.
Imagine you run a D2C brand that sells clothes.
Everything from stocking clothes, to ordering more, managing the delivery process and making sure your parcel gets to the customer safe and sound comes under logistics.
Sounds like a huge headache? It is and even more so in India.
Because India's logistics sector has over 20 government agencies, 37 export promotion councils, and over 500 certifications.
This means too much paperwork, which increases time and costs.
Another problem is our dependence on roads.
Take a look:
As compared to other countries we hardly use railways, waterways and airways for transportation.
That’s because they aren’t very well-developed and well-connected.
But road transportation in India is the most expensive: Rs. 2.5/tonne (probably because fewer goods can be delivered at the same time).
Water transport cost: Rs. 1.06/tonne.
Railway transport cost: Rs. 1.36/tonne.
This is probably why India’s logistics costs amount to 13%-14% of the GDP as compared to 8%-9% in developed countries.
👀 What is India Doing to Change This?
Well, the National Logistics Policy isn’t our first step towards fixing this issue.
We’ve already launched the Sagarmala and the Bharatmala projects to develop better road and port connectivity.
But much more needs to be done. And that's what the new policy is focusing on.
📜 The National Logistics Policy
The new policy wants to introduce tech and automation in the logistics space.
And the first step towards this is the introduction of the Unified Logistics Interface Platform and the Integration of Digital System.
These will bring all information regarding the transportation of goods in India on one platform.
How will this help?
First, it will make tracking goods much easier for everyone involved. Because all major transportation ministries’ databases will be integrated on the platform. So, even if a parcel is transported through trucks, then train and then a ship, manufacturers will be able to track it from a single platform.
Second, it will help truck fleets and ships look at transporting requirements. So, suppose a truck is coming back empty from Point A to Point B after dropping off its consignment. It can check if any deliveries need to be made between Point A to Point B and fulfil them. This will help trucks save fuel and gain incremental revenue.
Third, data from the platform regarding transportation time will also help businesses manage their inventory better.
And most importantly, all documents related to import, export, customs will also be uploaded on the platform, making it easier to keep track of them and check them. So, a lot of time wasted on check posts will be cut down.
The policy has also launched E-Logs, a platform where any and all issues regarding transportation and logistics can be reported. These complaints will be carefully monitored to address problems quickly, bringing more efficiency to the sector.
But just a one-off policy will not be enough to make an actual difference. This policy will have to be constantly revised and improved to bring about real change.
For this we have the Service Improvement Group, which will have ministers from different industries. They will constantly be looking into what new improvements can be made in the logistics space and also help set up logistics parks (to provide good-quality warehouses to businesses).
So, the policy tackles a lot of our problems and is a great step towards solving our logistics problems. Sadly, it isn’t enough.
🧐 The Problems the Policy Ignores
The policy focuses on data and tech, whereas one of our major problems is infrastructure.
Though we are building dedicated freight corridors just for transportation of goods, the speed of our cargo trains is still very slow (25-50kmph).
Super fast freight trains have been conceptualised, talked about and routinely delayed. Till they come to life, our logistics sector will be hopelessly behind.
What’s more, India is still dependent on foreign shipping lines and airlines to transport our goods abroad.
This costs us a considerable amount of foreign exchange. So, we also need to focus on developing our own shipping lines, shipping containers and airlines.
Only then can we truly solve the logistics sector's problems and become aatmanirbhar.
⚡ In a line: India's new logistics policy is trying to fix the sector's problems with tech and automation.
💡Quick question: Should India focus on infrastructure or is the tech play the right way out?
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