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On the 17th of September 2022. The Prime minister of India announced the National Logistics Policy and the Unified Logistics Interface. This policy is expected to revamp the entire logistics industry of India like railroads, water logistics, and air logistics. This policy will help India not to be the best competitor in the Asia market but all over the world. We are about to get complete exposure to the policy on this topic. And the flaws in the Indian economy that pull India behind the developed countries.
Problems in the logistics industry in India.
To understand the National logistics Policy we first need to understand the problems to hurdles that an average businessman face. Despite being the 5th largest economy. India has some significant flaws in its logistics industry which is an important pillar of our economy. It is the same logistics industry that is a nightmare for Indian businesses.
Goods Transportation in India
The cost of transporting one metric ton in India is Rs 18 by Air, Rs 3.6 by road, and Rs 1.6 by rail. Although Rail is the most economic way of transporting goods in India. Around a large share of goods in India are transported by road which is 71%.
Why 71% of goods through Roadways?
Firstly, we don’t have enough rail networks to meet the demand in every corner of India. Secondly, there are no separate tracks for transporting logistics on above of it passenger trains given more preference as a result delays in transportation. On top of that, the security via railway is so low there is no guarantee that your product will reach its destination.
Government Agencies and Intermediaries.
The Indian Logistics industry has more than 20 government agencies so it took a lot of time just to take various approval for transporting the goods. This is why most companies and businessmen opted for roadways for transporting their goods.
Depending on intermediaries. There are at least 2,5 intermediaries between the truck operator and shipper. The truck operator loses up to 20% of their earnings due to these intermediaries before the final payment. Hence the cost goes up too. These all are the major problems of the logistics in India as a result this industry is inefficient and couldn’t catch up with the market. This is where National Logistics Policy comes in.
What is National Logistics Policy?
In this policy, a super-optimized goods transportation model comes into play. Hub and Spoke model. In this model instead of sending out trucks to their destination city. Hub centres will be constructed in some major cities will that will work as hubs to transport the goods coming from one place to distribute to various locations and will go back to their respective cities. As a result, these trucks will cover less distance, and no. of trucks involved in shipment will be less and will reduce the cost of goods too.
But even if this model looks good on paper the execution of this system required cutting-edge technology, coordination, and management. Delays of one truck will be the cause of the inefficiency of the entire network. Transparent enough to the businesses so they can track their shipment.
Major Components of National Logistics Policy.
For tackling all of these problems mentioned above. National Logistics Policy includes two main components Integrated digital service for logistics service and a Unified logistics interface platform.
Unified Logistics Interface PLatform(ULIP): All the stakeholders will be in the single unified interface that will allow all the stakeholders to manage track and offer their services.
In National Logistics Policy there will be 35 Multiple-Modal Logistics Parks Projects coming up and they will be developed under Public and Private partnerships across the country. These 35 MMPL act as a mega hub that will act as freight catering storing and warehousing and also facilitate other modes of transport, not just roadways. Through ULIP businessmen can access the most optimized and efficient route through which they can ship their goods. This platform includes all modes of transport.
Lastly, when a businessman transporting any goods from one state to another. One mode of transport to another or another warehouse. All these procedures require approval from different agencies that are not connected. In the Unified Logistics Interface Platform, it is expected that all state houses and ministries will tie together for the process of permission and certification easy.