PM Modi Launches National Logistics Policy, Says It Will Bring Down High Logistics Costs For Companies

At launch of National Logistics Policy, PM Modi said India is now world's 5th largest economy and emerging as a manufacturing hub, with the world accepting PLI scheme to boost domestic manufacturing.

Prime Minister Narendra Modi.

Source : Getty

Prime Minister Narendra Modi Saturday launched the National Logistics Policy Saturday, which he said will tackle difficulties affecting the transportation sector, expedite last-mile deliveries, and reduce costs for companies. Speaking at the event held at Vigyan Bhawan. in New Delhi, he said India is world's 5th largest economy today and is emerging as a manufacturing hub. The world has accepted production-linked incentive (PLI) scheme for boosting domestic manufacturing, the PM said.

Modi said the policy aims to bring down the high logistics costs. "We have to bring the 13-14% logistic costs down to single digits to become globally competitive. It is a low-hanging fruit," he said.

National Logistics Policy is a comprehensive effort to enhance efficiency of the logistics ecosystem in India. https://t.co/70ZlTMQILp

— Narendra Modi (@narendramodi) September 17, 2022

What Is The National Logistics Policy?

It will be a policy that aims to establish a single-window e-Logistics marketplace with an emphasis on creating jobs, developing skills, and boosting the competitiveness of MSMEs.

The goal of the policy is to lower logistics costs from around 13% of GDP to 7.5% of GDP over the coming years. The Indian logistics market is estimated to be valued around USD 200 billion. In comparison to rates of 9–10% in the US and Europe and 11% in Japan, logistics costs in India are high.

Integrated digital logistics systems, a unified logistics interface platform, ease of logistics, standardisation of physical assets and benchmarking service quality standards, state engagement, human resource development and capacity building, export-import logistics, and sectoral plans for efficient logistics and facilitation of the development of logistics parks are some of the other key components of the comprehensive plan.

The policy stipulates that there will be a single point of contact for all logistical and trade facilitation issues; at the moment, this includes road transport, shipping, railways, civil aviation, posts, and the ministries of commerce, industry, and finance.

The sector supports the livelihood of more than 22 million people and according to the government, upgrading the sector would enable a 10% fall in indirect logistics costs, which will promote a growth of 5 to 8% in exports.

Why The Need for National Logistics Policy

According to a statement from the Prime Minister's Office, a national policy is required since India has higher logistical costs than other developed economies. The Press release read "It is imperative to reduce the logistics cost in India for improving the competitiveness of Indian goods both in domestic as well as export markets. Reduced logistics cost improves efficiency cutting across various sectors of the economy, encouraging value addition and enterprise."

The statement further added "National Logistics Policy, a comprehensive effort to address issues of high cost and inefficiency by laying down an overarching interdisciplinary, cross-sectoral and multi-jurisdictional framework for the development of the entire logistics ecosystem, is yet another step in this direction.”

This is an initiative to improve the competitiveness of Indian goods, increase employment opportunities and to enhance economic growth.