From UPSC perspective, the following things are important :
Prelims level : NLP
Mains level : Read the attached story
The government will announce the National Logistics Policy (NLP) this week, aiming to bring down logistics costs and address challenges plaguing importers and exporters.
What is Logistics?
- Logistics refers to the overall process of managing how resources are acquired, stored, and transported to their final destination.
- It involves identifying prospective distributors and suppliers and determining their effectiveness and accessibility.
Why need a logistics policy?
- Organizing and consolidating the sector: India’s logistics sector is largely unorganized and fragmented.
- Reducing logistics cost: This is why the country’s logistics costs are as high as 14-15% of the GDP, against 7-8% in developed nations such as the Singapore and the US, who leverage it to boost exports. The NLP aims to bring down India’s logistics cost to 8% in the next five years.
- Preventing waste of perishable items: As per some estimates in India, about 16% of agri-production is wasted at different stages of the supply chain.
- Warehousing development: Moreover, due to factors such as limited capacity and availability of warehouses, the cost of transaction increases.
- Multi-modal integration: The new policy is going about simplification, technology and will have a multimodal approach that will combine rail, water, and air — all modes of transport.
What role will technology play?
- Advanced analytics: The NLP will aim to harness technologies such as AI and blockchain. It aims to create a data analytics centre for driving greater transparency and continuous monitoring of key logistics metrics.
- Single window portal: Under NLP, a portal will be created, where service providers such as warehousing providers, shipping experts, transporters, customs brokers, and various governmental agencies will be unified.
Will it boost cooperation between ministries?
- Unifying multiple departments: Currently, the logistics value chain is managed by several ministries—road transport and highways, shipping, railways, and civil aviation.
- Single-point clearances: Agencies like the Central Drug Standard Control Organization and the Food Safety and Standard Authority of India provide clearances.
- Nationwide integration: The NLP could enhance their integration at the central level.
What about reducing the carbon footprint?
- Energy-efficient transportation: The draft logistics policy lays emphasis on the shift to more energy-efficient means of transportation, as well as the use of greener fuels which could reduce the supply chain’s carbon footprint.
- Vehicular emission reduction: Moreover, the draft policy, released earlier, emphasized creating regulations for controlling vehicular noise, emissions, and wastage.
- Green warehousing principles: The new logistics policy also aims to incorporate green principles in the functioning of warehouses which contribute to nearly 10% of the logistics costs.
Will it change India’s commodity transport?
- Transport of crucial commodities: The proposed policy aims to focus on the transport of crucial commodities such as coal, steel, iron ore, food grains, steel, cement, fruits and vegetables.
- Creating nationwide clusters: The current logistical network for transporting them is mainly confined to regional clusters.
- Integrating national supply-chains: The NLP could help establish a link between the place of origin, and destination place and integrate the supply on a national level.
- Optimum logistics identification: The draft also proposes identification of the right mode of transport for each of these commodities to minimise losses during transport.