Govt giving final touches to logistics policy; draft to reach Cabinet soon

The commerce and industry department is drafting the proposed national logistics policy, aimed at bringing down the logistics cost to less than 10 per cent of India’s gross domestic product, and the draft is set to reach the Cabinet soon.

The cost comprises 14 per cent of GDP and the Union government is planning to reduce it by 2022.

Targeting faster movements of goods nationwide and integrating logistics channels, the policy is set to lower India's high logistics costs and boost the export of commodities.

For this purpose, the policy aims to create a national logistics e-marketplace as a one-stop marketplace for exporters and importers, set up a separate fund for start-ups in the logistics sector, and double employment in the sector.

However, inter-ministerial spats have continued as the government looks to shift significant chunks of existing schemes from some departments to the proposed logistics department under the commerce and industry ministry.

It is learnt that some of the marquee projects of the Ministry of Road Transport and Highways may now be handled by the logistics department of the commerce ministry.

A case in point, the series of logistics parks envisaged under the broader Bharatmala scheme of the road transport ministry may now be implemented by Udyog Bhavan, which has championed the plan to reduce high logistics costs.

The draft has been prepared in consultation with the ministries of Railways, Road Transport and Highways and Shipping and Civil Aviation.

Forty-six partnering government agencies (PGA) inputs were analysed in detail for consideration in the policy.

“We had published the draft of the logistics policy in February, and have collated significant amounts of public comments. It will soon be presented to the Cabinet,” a senior government official said.

Sectoral push

In the first of such studies globally, the government has commissioned the India Institute of Foreign Trade (IIFT) to assess the unique difficulties faced by high value, labour intensive sectors in the logistics space. In the first phase, this focuses on electronics, marine products, apparel, agriculture, gems & jewellery, chemicals, engineering goods and pharmaceuticals.

“Product-specific studies are absolutely necessary since there's no ‘one shoe fits all’ solution for such a broad basket of goods. This move is part of the government's broader plan to make exports more competitive and reduce costs,” said Manoj Pant, director of the Indian Institute of Foreign Trade and a senior trade expert. The findings will be presented to the government by February, 2020, he added.

India's logistics sector is highly fragmented and complex with more than 20 government agencies, 40 PGAs, 37 export promotion councils, 500 certifications, 10,000 commodities. It also involves 12 million employment base, 200 shipping agencies, 36 logistic services, 129 Inland Container Depots, 168 Container Freight Stations, 50 Information technology ecosystems along with banks & insurance agencies. Further, 81 authorities and 500 certificates are required for trade, the government said on Thursday.

Official estimates put the size of the Indian logistics market at $160 billion and growing at about 5 per cent annually. According to the government, logistics services and infrastructure remain highly concentrated in just 15 states and union territories, which account for 90 per cent of the total exports by value.

To spread this out, the government has pushed states to actively cooperate on the national logistics index. 

Developed in partnership with Deloitte, it ranks states in terms of the logistical support they provided to promote goods trade, through parameters such as the competitiveness of pricing, timeliness and availability of infrastructure and that of services, among others.

In a review meeting on the draft policy on Wednesday, Commerce and Industry Minister Piyush Goyal flagged the high levels of food wastage due to inefficiencies in the sector. 

He pointed out 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 of farmer’s produce.

The policy aims to create a national logistics e-marketplace for exporters and importers and set up a fund for start-ups in the logistics sector to double employment in the sector industries in focus — electronics, marine products, apparel, agriculture, gems and jewellery, chemicals, engineering goods and pharmaceuticals.

 

Targets of new policy

 

• Creating a national logistics e-marketplace for exporters and importers
• Setting up a separate fund for start-ups in the logistics sector to double employment 
• Focusing on industries: Electronics, marine products, apparel, agriculture, gems & jewellery, chemicals, engineering goods and pharmaceuticals