National Logistics Policy: Creating an efficient and integrated Logistics ecosystem

National Logistics Policy: Creating an efficient and integrated Logistics ecosystem

The National Logistics Policy aims to streamline logistics operations, reduce costs, and attract investments for a seamless and interconnected logistics ecosystem through targeted digitization efforts and a comprehensive action plan.

Recognising scope of logistics

The introduction of the National Logistics Policy was a response to the recognition that logistics encompasses more than just transportation. It involves various aspects such as storage, packaging, and value addition in the movement of goods and services. While stakeholders in the transportation sector have introduced various policy and process reforms, as need was felt to integrate them and streamline the entire logistics cycle. 

Establishment of logistics division

In 2017–18, the Logistics Division was established within the Department of Commerce under the Ministry of Commerce and Industry. The division’s mandate was to enhance logistics efficiency, reduce costs, attract investments, and improve trade prospects. However, the lack of a policy framework and a precise definition of logistics was evident.

Two-fold approach: digitization and NLP

In 2022, the division implemented a dual approach to addressing logistics challenges. First, they formulated the National Logistics Policy (NLP) with an action plan to target areas like standardisation, skill development, state engagement, industry interface, and logistics facilities. Second they focused on digitization by integrating multiple logistics-related digital systems into the Unified Logistics Interface Platform (ULIP), streamlining transactions and data access. Launched by the Hon’ble Prime Minister on September 17, 2022, the NLP complements the PM GatiShakti NMP, aiming to improve delivery logistics services, streamline processes, and promote technology adoption, and human resource development while fostering integrated, multimodal infrastructural planning.

The NLP, developed by the Logistics Division, DPIIT, addresses critical gaps in the logistics ecosystem and strives to reduce logistics costs, enhance Indian exports’ competitiveness, and achieve a USD 400 billion export target. It also focuses on improving logistics demand in specific sectors like agriculture, MSMEs, bulk commodities, dangerous goods, temperature-sensitive cargo, packaging, and EXIM traffic through an interdisciplinary and cross-sector approach, integrating Indian supply chains with global ones.

The NLP provides both a vision for the sector and a comprehensive action plan to achieve the outlined targets. Each action area has been meticulously curated with proposed solutions, an implementation plan and timelines, and responsible authorities.

India is focused on technology-driven growth with digital initiatives like the GIS-based NMP platform, the Unified Logistics Interface Platform (ULIP), the Logistics Data Bank (LDB), etc. for cost- and time-effective project planning and implementation and for bringing efficiency to the logistics sector. The Logistics Data Bank (LDB), hosted on ULIP, received acclaim and contributed to India’s improved ranking in the World Bank’s LPI report.

ULIP provides an excellent platform to private players to host various use cases and applications for track-and-trace digital document exchange, etc., which eases operations in the logistics sector. This fosters predictability, transparency, and reliability, leading to reduced logistics costs, reduced supply chain waste, and improved ease of living.

The NLP guides the promotion of standardisation, digitization, and automation throughout the logistics value chain, which is crucial for improving ease of doing business. Standardisation of physical assets, like warehousing, is being addressed with measures such as launching an E-Handbook on Warehousing Standards on September 17, 2022.

With approximately 22 million employees in the logistics sector and continuous new entrants, investing in skill development is crucial for ensuring service quality and efficiency. Though initiatives for global supply chain training exist, the lack of formal qualification packs for specific roles poses challenges. The Government is working to authorise qualification packs to boost the global standing of logistics professionals.

To foster coordination and address logistics issues promptly, the inter-ministerial Services Improvement Group (SIG) brings together stakeholders from the government and private sector. The E-LoGs portal allows user industry associations to register feedback and issues, which SIG handles for speedy resolution, greatly benefiting the industry. Additionally, logistics has gained significant attention at the state level, with 21 states having adopted state logistics policies in alignment with NLP’s objectives. This reflects the spirit of cooperative federalism, as states fully engage in the process.

A Logistics Human Resources Development & Capacity Building Strategy is being developed under which competency frameworks for formalisation of logistics professionals are being developed, steps are being taken to mainstream logistics and supply chain in course curriculums.

To bring holistic focus on logistics at State level, 21 states have notified State Logistics Policies, aligned with the NLP.

The NLP’s focus includes reducing logistics costs, which currently vary between 8-14% of GDP based on private sector studies. To establish a robust and comprehensive logistics cost framework, the Government is collaborating with relevant stakeholders, including international and national academia, experts, and government officials. This evidence-based framework aims to pinpoint issues within the logistics ecosystem, leading to targeted interventions and cost optimisation. By enhancing sector efficiency and global competitiveness, India can become a sought-after transshipment hub, improve the global positioning of Make in India products, and attract investment. The Government plans to provide rough estimates of India’s logistics costs and introduce the scientific calculation framework by year’s end for periodic assessments.

The National Logistics Policy encompasses sectoral plans developed by user ministries, analysing infrastructure and logistics needs based on various factors. These plans include last- and first-mile connectivity requirements and logistics facility demands, converted into projects under PMGS. Additionally, a Comprehensive Port Connectivity Plan aims to improve connectivity to ports. The policy enhances competitiveness for Micro, Small, and Medium Enterprises, agriculture, fast-moving consumer goods, and electronics sectors through better multimodal connectivity and logistics facilities. By focusing on both hard and soft infrastructure development, the NLP envisions an efficient, interconnected logistics ecosystem, benefiting the entire industry and facilitating seamless movement of goods and services across modes.

Powered by India’s reforms and focus on improving Logistics infrastructure has led to rise in India’s World Bank’s Logistics Performance Index (LPI) ranking. India’s ranking improved by six places from 44 in 2018 to 38 out of 139 countries in 2023 in LPI.

Vision for an interconnected logistics ecosystem

With a vision for an interconnected and efficient logistics ecosystem, the National Logistics Policy aims to revolutionise India’s logistics sector. Through targeted digitization efforts, the Unified Logistics Interface Platform (ULIP), and the Comprehensive Logistics Action Plan (CLAP), the policy seeks to bridge the gaps and streamline the movement of commodities and services in the country. By optimising logistics operations, reducing costs, and enhancing trade prospects, this policy sets the course for a more competitive and thriving logistics landscape in India.

With a vision for an interconnected and efficient logistics ecosystem, the National Logistics Policy aims to revolutionise India’s logistics sector

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