Explained: PM Modi to launch National Logistics Policy on September 17, what is it?

Prime Minister Narendra Modi will unveil the National Logistics Policy on Saturday. The policy is aimed at enabling the seamless movement of goods across the country

“On September 17, the Prime Minister is going to release the country's logistics policy,” Piyush Goyal, Minister of Commerce and Industry, told the members of the Board of Trade.

First introduced in the Budget 2020 speech by Finance Minister Nirmala Sitharaman, the National Logistics Policy aims to facilitate the movement of goods across the country. Currently, high logistics costs bring down the competitiveness of domestic goods in the global market. Logistics spending in India stands at around 13-14 percent of India’s gross domestic product (GDP), said Goyal. Countries like Germany and Japan which are consistently ranked high for their logistics infrastructure and systems spend around 8-9 percent of their GDP on logistics costs, in comparison.

While the details will emerge only after the policy is launched, the government is focusing on processes such as re-engineering, digitisation and multi-modal transport to bring down logistics costs and improve efficiency. The government aims to reduce indirect logistics costs by up to 10 percent, which the government says will lead to an increase in exports of 5-8 percent.

The government has already been trying to improve India’s logistic operations and infrastructure under initiatives like the construction of Multimodal Logistics Parks, the creation of the Unified Logistics Interface Platform (ULIP), and investment under the PM GatiShakti National Master Plan as announced in this year's Budget speech.

The policy will directly affect India’s logistics industry. The industry consists of over 20 government agencies along with 40 partner government agencies. Other stakeholders include 37 export promotion councils, 200 shipping agencies, 36 logistics services, 129 inland container depots, 168 container freight stations and 50 IT ecosystems, banks and insurance agencies. In total, the industry handles over 10,000 commodities spread across 500 certifications with a $160 billion market size.

A total of 22 million people are estimated to be employed in the industry. Apart from directly affecting the logistics industry, the policy will affect every industry that has to move goods physically from one place to another. As logistics costs come down and efficiency increases, companies will be able to earn more through increased margins.