National Logistics Policy Is Long-Term Positive For Industry, To Reduce Overall Logistics Cost: ICRA

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The National Logistics Policy (NLP), launched by the Government of India in September 2022, is a long-term positive for the Indian logistics industry, given its overall focus on attaining better integration of different modes of transport, according to rating agency Icra. It added that the NLP will lower the cost of logistics by reducing the over-dependence on the road sector.

The National Logistics Policy (NLP), launched by the Government of India in September 2022, aims to promote the seamless movement of goods, overcome transport-related challenges, encourage digitisation and significantly reduce logistics time and cost. The policy is aimed at reducing India’s logistics cost considerably and bringing its percentage of GDP in line with the developed economies.

Suprio Banerjee, vice-president and sector head at Icra, said, “The introduction of NLP is a long-term positive for the Indian logistics industry, given its overall focus on attaining better integration of different modes of transport, which in turn shall lead to faster turnaround and higher efficiency. It is also expected to lower the cost of logistics by reducing the over-dependence on the road sector, thereby reducing congestion and ensuring better asset utilisation.”

Banerjee added that the implementation challenges, however, are expected as multiple agencies, stakeholders, and physical entities are involved, which will require proper coordination for the successful implementation of the policy.

“The implementation will also entail heavy capital investments to be policy-compliant. The benefits of the policy should also be evaluated against its compliance costs. Nonetheless, the long-term benefits of the policy will outweigh the short-term challenges,” she said.

The salient features of the NLP include setting key targets, which include a reduction in the logistics cost in India to be comparable to global benchmarks by 2030 and be among the top 25 countries by 2030 (currently ranked at 44) in the logistics performance index rankings as also creating a data-driven decision support mechanism for an efficient logistics ecosystem. The policy will be implemented through an eight-pronged comprehensive logistics action plan (CLAP) encompassing the full spectrum of the sector.

The NLP also focuses on the Unified Logistics Interface Platform (ULIP), a single-window platform for all transportation services, and a new digital platform, Ease of Logistics Services (E-logs), for a quick resolution of issues raised by the industry, reducing costs, preventing time leakages and ensuring better efficiency.

“The policy will also help in generating employment and better skills, along with making medium and small enterprises more competitive. It will lead to the higher formalisation of the industry and reduce fragmentation in the sector. This is expected to enhance the efficiency of last-mile connectivity and reduce the over-dependence on roads,” Icra added.

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