National Logistics Policy on hold due to inter-ministerial tiff: Sources


The much-awaited National Logistics Policy that aims to reduce India’s prohibitively high costs, ensure faster movement of goods and boost exports remains stuck in the discussion stages, due to lack of final inputs from the ministries such as road transport and shipping, sources aware of the matter informs.

As per the sources, both the ministries have sought more time to assess the proposals and conduct technical reviews. It is the differences over who will run the key schemes that have slowed the process the source said adding that these include parts of the Bharatmala Pariyojana, the centrally sponsored and funded road and highway project, and the creation of a series of integrated logistics parks. 

After getting ‘infrastructure’ status earlier in 2017, the logistics sector in India is pegged at upwards of $160 billion, with an annual growth rate of 10.5 percent, according to industry estimates.

India has never had a uniform approach to logistics as a subject of public policy.

“The various facets of logistics and the necessary policies that direct them have always been implemented by different bodies. This ranges from the planning of new highways, toll collections, fixing of freight charges, taxes on commercial vehicles, standardization of cargo containers to even traffic rules near toll plazas,” said a senior transport policy expert who is advising the government on the proposed policy.

Understanding the need to boost the logistics industry and give more importance to infrastructure creation and highway construction, the Narendra Modi-led government prioritized a separate logistics division in its first term and this was set up in 2017, under the commerce department of the commerce and industry ministry. 

The ministry then worked on the up-gradation of the logistics division to a full-fledged department in 2019. This would have meant the transfer of significant chunks of existing schemes from other government bodies such as the road transport and highways ministry and the ports, shipping, and waterways ministry, a senior official said.

“A large part of the proposed policy is focused on identifying the ways in which states can be encouraged to provide enabling policies to solve logistics-related problems that hold back trade, both internal and foreign. Therefore, the commerce ministry has pushed to consolidate all logistics planning under it to improve India’s ranking in the global Logistics Performance Index,” he added.

The logistics division is now working on making the domestic movement of goods faster, cheaper, and more efficient while also making exports more competitive.

Earlier in 2018, the commerce and industry ministry also launched an annual Logistics Ease Across Different States (LEADS) index that seeks to rank states in terms of the logistical support they provide to promote goods trade. 

And in early 2021, it hired Ernst & Young to undertake a pan-national survey covering export/import firms, trading houses, freight forwarders, logistics service providers, and terminal operators for the latest LEADS rankings.

Despite the several initiatives taken by the government, the Logistics sector remains complex. And, the estimated cost of Logistics in India remains 13-14 percent of the GDP. 

The proposed policy aims to reduce this to 9-10 percent of GDP. Further once implemented the policy, will ease the process and boost the nation’s exports.

 Currently, more than 10,000 traded commodities are further monitored by 81 authorities and 500 certificates are required for exports.

The national logistics policy also proposes a national logistics grid to reduce time and costs for truck, riverine, and shipping routes to boost multimodal trade and a series of mega logistics parks.

Overall, it aims at integrated development of the sector by way of policy changes, improvement in procedures, identification of bottlenecks and gaps, and the introduction of technology.

Source: Money Control

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