Draft National Logistics Policy: Piyush Goyal asks ministries, depts to work together to reduce logistics cost

Union of Commerce Minister Piyush Goyal today reviewed the draft National Logistics Policy and the proposed action plan for implementation of the policy, which has been prepared in consultation with the ministries of Railways, Road Transport and Highways, Shipping and Civil Aviation, said a government statement, adding that 46 partnering government agencies' inputs were analysed in detail for consideration in the policy.

In his opening remarks, Goyal urged all the four ministries and their departments to leverage existing infrastructure to support each other in the logistics chain, as it will not only help in maximizing capacity utilization but also reduce costs. All the four ministries were also directed to work in coordination with each other so that the 14% logistics cost of India’s GDP may be brought down to 9%, said the statement.

According to Piyush Goyal, all efforts must be made for farm produce of food grains, fruits and vegetables to reach from farm to market with minimum wastage of time, adding that a central scheme for cold chain across the country especially for fruits, vegetables and perishables may be made part of the action plan of the draft logistics policy so that it improves efficiency and reduces the loss in agri produce of farmers.

The meeting discussed in detail all the aspects of logistics related to railways, civil aviation, shipping and inland waterways, road transport, ropeways warehousing and cold chain. It also discussed the issues relating to rail freight rationalization and freight policy for Dedicated Freight Corridor (DFC), having immediate implications for modal shift.

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The Commerce and Industry minister also directed that whenever any new road, railway, airport and shipping port project is being considered the Logistics Department must be a part of consultation process so that holistic planning will be possible, freight movement will be rationalized and passenger experience will improve.

The ministry is formulating the logistics policy so that India’s trade competitiveness grows, more jobs are created, India’s performance in global rankings improves and paves the way for the country to become a logistics hub, the statement added.

Notably, India’s logistics sector is highly defragmented and the aim is to reduce the logistics cost from the present 14% of GDP to less than 10% by 2022. With more than 20 government agencies, 40 PGAs, 37 export promotion councils, 500 certifications, 10000 commodities, and 160 billion market size, the sector also involves 12 million employment base, 200 shipping agencies, 36 logistic services, 129 ICDs, 168 CFSs, 50 IT ecosystems and banks & insurance agencies. Further, 81 authorities and 500 certificates are required for EXIM.

As per the Economic Survey 2017-18, the Indian logistics sector provides livelihood to more than 22 million people and improving the sector will facilitate 10% decrease in indirect logistics cost leading to the growth of 5 to 8% in exports. The Survey also estimated that the worth of Indian logistics market would be around $215 billion in next two years compared to about $160 billion currently.