GS Paper 3
Syllabus: Indian Economy: Infrastructure
Context: The central government has urged states to create logistics policies to enhance ease of doing business and align with the PM GatiShakti initiative, which aids in infrastructure project planning.
- India has ranked 38 out of 139 countries in World Bank’s Logistics Performance Index 2023 (2018 rank of India was 44)
- Gujarathas topped the Logistics Ease Across Different States (LEADS) 2021 index
- The unorganized sector amounts to over 90% of the logistics sector.
Need for Logistics policy in States:
- The logistics cost in India (about 13-14 %) is high as compared to other developed economies (8%)
- India’s logistics sector is highly defragmented and very complex esp. of states
- This sector provides employment to more than 22 million people and is expected to grow at the rate of over 10% over the next 5 years
- Logistics is the backbone of India’s international tradeand will help in the diversification of not only India’s export basket but also of products and countries.
Last year, India unveiled its National Logistics Policy (NLP) with the aim of promoting the seamless movement of goods and enhancing the competitiveness of the industry.
Aim of the New National Logistics Policy (NLP)
- Reducing costs for the logistics sector to 8% by 2030
- Develop skills among youthand create employment opportunities.
- Promote the seamless movementof goods and enhance the competitiveness of the industry across the nation
- Focus on some key areas like process re-engineering, digitization and multi-modal transport
Four Major Steps Under National Logistics Policy:
|Integration of Digital System (IDS)||Integration of digital systems from seven different departments (e.g., road transport, railway, customs, aviation, foreign trade, and commerce ministries)|
|Unified Logistics Interface Platform (ULIP)||Improving cargo movement, real-time confidential information exchange, leveraging NICDC’s Logistics Data Bank Project|
|Ease of Logistics (ELOG)||Simplifying rules and streamlining logistics business|
|System Improvement Group (SIG)||Monitoring logistics-related projects and addressing obstacles|
Other steps taken by the government:
- The logistics divisionin the Commerce department has been created.
- Logistics Efficiency Enhancement Program and Vehicle Fleet Modernization Program to improve logistics efficiency
- So far, 22 states have already implemented logistics policies
- Gati Shakti Scheme
- Bharatmala Program(building about 84,000 Km of new highways)
- Sagarmala Project (unlock the potential of the country’s 7,5000 Km coastline and 14,500 Km of navigable waterways)
- Railways: Freight corridors
- Previously, the government plans to replace the Multimodal Transportation of Goods Act, 1993 (MMTG)with a National Logistics Efficiency and Advancement Predictability and Safety Act (NLEAPS)
PM Gati Shakti Master Plan (2021), is a Rs. 100 lakh-crore project for developing ‘holistic infrastructure’. It aims to ensure the speed (Gati) and Power (Shakti) of infrastructure projects in the next four years, with a focus on expediting works on the ground, saving costs creating jobs, and bringing down the logistics cost.
A push towards logistics, prioritizing government measures to reduce India’s extremely high logistics costs, plethora of regulations, poor connectivity and distribution challenges is the current need of the hour. Elucidate. (15M)