SUMMARY
The National Logistics Policy aims to ensure quick last-mile delivery, end transport-related challenges, and bring down the logistics costs from 13-14% to single-digit
The logistics players have welcomed the policy and said the push towards seamless multimodal transportation and modern connectivity would be a game changer
However, coordination between different ministries, alignment of key stakeholders, and pace of infrastructure development are likely to be some of the challenges faced in implementation
India’s overall intercity road logistics market is poised to be worth $299 Bn by 2025, according to Inc42’s ‘The State of Indian Startup Ecosystem Report 2022’. Around 63% of the total demand is expected to come from on-demand intercity logistics, and the demand will be impromptu with prepayment, unlike the traditional contractual model. The National Logistics Policy (NLP), launched last week, envisions nurturing India’s logistics framework along the same lines.
The policy aims to ensure quick last-mile delivery, end transport-related challenges, and bring down logistics costs from 13-14% to single-digit to make India a globally competitive market.
“Driving efficiency and reduction in logistics costs have traditionally been a barrier to not just the mid but also the last mile, which could have been addressed only via digitisation. NLP emphasises the critical role of technology in facilitating seamless information exchange between drivers and businesses, ultimately transforming the middle and last mile from a cost center to a revenue generator,” said Mehul Kapadia, chief growth officer, Locus.
Unicommerce CEO Kapil Makhija further emphasised that the integration of technologies is expected to help standardise physical assets, enhance operational efficiencies at warehouses leading to reduction in turn-around-time for transport service providers. Additionally, the policy will help benchmark service quality standards that are anticipated to improve the existing supply chain for ecommerce companies, D2C and retail brands.
“Besides boosting logistics infrastructure in India, the policy will offer opportunities to expand international business,” added Abhishek Bansal, CEO & Cofounder, Shadowfax.
Key Areas For Logistics Cost Reduction
According to Pervinder Singh Chawla, cofounder of truck aggregation platform Onmove, India has largely been dependent on road and rail transportation, and both these modes are far less efficient than waterways. Between road and rail transportation, the share of road transportation is about 60%-65%, and India moves goods on the most expensive mode of transportation, he added.
Some of the key areas for logistics cost reduction are reduced inventory overflow and product obsolescence, reduced wastage of perishable products, and movement of goods over efficient modes of transportation, Chawla said.
“Efficient and cost-effective mode of transportation would certainly reduce the cost of logistics. Efficient and cost-effective mode of transportation without logistics infrastructure is not enough for overall logistics cost to be optimum,” he added.
The NLP aims to make information flow seamless across key stakeholders and regulators, improve efficiency through multi-modal transportation, and create a strong supply chain through robust infrastructure.
The government had been working on the NLP for three years. The commerce ministry released a draft logistics policy for consultation in 2019, but it was delayed due to the Covid-19 pandemic. During her Budget 2022-23 speech, Finance Minister Nirmala Sitharaman once again announced the NLP.
“Today’s India prepares the ground before bringing any policy, only then a policy can be implemented successfully. The National Logistics Policy has not come out of the blue and there are 8 years of hard work behind it. There are policy changes, major decisions, and, if I talk about myself, it has my 22 years of governance experience behind it,” Prime Minister Narendra Modi said while unveiling the policy.
India To Be Among Top 25 Logistics Performers
Vineet Agarwal, MD of Transport Corporation of India (TCI), highlighted that the push towards seamless multimodal transportation and modern connectivity would be a game changer as it will shift the transportation from just roads to other modes as well.
Some of the key focus areas of the NLP, including paperless supply chain initiative, strengthened cooperative federalism, ease of logistics services portal (e-log), and standardisation of the warehousing sector, will help India become one of the top 25 logistics performers in the world, Agarwal said.
The Unified Logistics Interface Platform (ULIP) under the NLP will enhance visibility for customers and enable logistics companies like TCI to adopt digitisation on a much larger scale , he added.
The PM Gatishakti National Master Plan will also support the NLP. The PM Gatishakti portal gets data from the central and state governments in about 1,500 layers, the government said in a release.
Speaking on this, Modi said, “Gatishakti and National Logistics Policy together are now taking the country towards a new work culture. The talent that will come out of the recently approved Gatishakti University will also help it a lot.”
According to Sachin Agrawal, cofounder & CEO of Bizongo, the most important part of the policy is the integration of technology and the launch of a single window e-logistics marketplace that will relieve the stress of shipment allocations and offer businesses more control over supply chains.
This becomes even more integral as both B2B and B2C ecommerce markets expand rapidly in India. Considering that e-commerce has a direct impact on warehouse, logistics, and supply chain businesses, the pressure on these industries is also growing multifold. On one hand, the increasing competitiveness of the industry is compelling businesses to establish several fulfilment centres across the globe, on the other hand, customers continue to demand more and expect swift deliveries.
“Here, the single window logistics platform will enable smart, proactive decision-making and promote the ‘ease of doing business’ for various industry players. As we go forward it will be interesting to see increased use of automation and AI/ML solutions embedded into the platform to streamline first-mile to last-mile optimization and ensure error-free, rapid, and efficient dispatches,” Agrawal added.
The Road Ahead
The Indian government has worked relentlessly in the past few years towards initiatives like paperless EXIM trade process through e-sanchit, faceless assessment for customs, provisions for e-way bills, FASTag, GST, among others, that have been a catalyst in building the foundation of the Indian logistics industry.
“Drones will soon contribute to agricultural logistics from remotest regions of the Himalayas or remote islands…their products will be made accessible to the metros of India. ULIP, e-log, GatiShakti, and many more initiatives will try to deliver a cheetah’s speed to the logistics of India. At the grassroots level, NLP will also help truck drivers get a peaceful night and also help the ‘shramik’ class to get respect and dignity,” said Zaiba Sarang, cofounder of iThink Logistics.
The NLP aims to use robust infrastructure and technology to support a fast-growing manufacturing economy. However, Onmove’s Chawla cautioned that while the policy has covered most of the focus areas, there would be implementation challenges like coordination between different ministries, alignment of key stakeholders for the larger picture, and pace of infrastructure development.
In the post-pandemic era, the Indian government has renewed its focus on policy aspects across sectors. Earlier this year, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) came out with a plethora of initiatives and regulations to bring transparency to India’s financial services sector. At the same time, draft ecommerce rules and draft ecommerce guidelines are also under discussion.
The launch of the NLP has been welcomed by the logistics ecosystem. However, the focus should now shift to implementation to make it a success.
