The new policy, first introduced in the 2020 budget speech by Finance Minister Nirmala Sitharaman, is unveiled on Modi’s birthday. The new policy will bring an integrated and technological approach to logistics operations to close the efficiency gap.
“We are the 5th largest economy in the world. India is setting new export targets and we have been able to achieve these targets. India is emerging as a global manufacturing hub and the world has started to recognize this fact. NLP will give it a new impetus,” Modi said.
He added that the policy is that springboard performance is key. “Policy plus performance equals growth. Politics can be a driving and guiding force and NLP should not be seen as just a document. NLP is the culmination of 8 years of effort,” Modi said.
Modi added that container ship turnaround at ports has been reduced from 44 hours to 26 hours. New environmentally friendly waterways are being installed, 40 air cargo terminals have been installed to facilitate exports, 30 airports have cold storage facilities, and 35 multimodal logistics facilities are being installed.
He pointed out that the GST has reduced paperwork for the movement of goods between states. Drone transport, he said, is also likely to become an important logistics mode. “We already have a progressive drone policy,” Modi said.
According to the Prime Minister, India must reduce the logistics cost from 13 to 14% of GDP to single digits. “It’s a low-hanging fruit to compete on a global scale,” Modi said.
“NLP will work as a dual working engine with Prime Minister Gati Shakti. With its implementation, costs will go down, international trade will grow and startups will see new avenues,” Trade and Industry Minister Piyush Goyal said at the launch.
One of its main objectives would be to make Indian logistics competitive by world standards. Key areas include IDS – Digital System Integration, ULIP – Unified Logistics Interface Platform, ELOG – Logistics Facility and GIS – System Improvement Group. An electronic manual was also launched for the standardization of the warehousing sector. New management training courses around Logistics and the Supply Chain are also planned.
According to the (latest available) World Bank Logistics Index of 2018, India is ranked 44th in terms of logistics costs, lagging behind countries like China and Vietnam, which rank 26th and 39th respectively. Logistics cost in India is estimated at 13-14% of GDP compared to 7-8% in developed economies.
According to a report by Arthur D. Little-CII, higher logistics costs lead to a $180 billion competitiveness gap for India, and this gap is expected to reach $500 billion by 2030. Experts point out that high logistics costs can be attributed to an unfavorable political regime and an underutilized multimodal transport system heavily biased in favor of road transport.