Logistics Sector & National Logistics Policy
🟠 Topic 37: Logistics Sector & National Logistics Policy
📌 Introduction
The logistics sector is the lifeline of economic activity, enabling the smooth movement of goods, services, and resources across regions and sectors. Efficient logistics reduce costs, enhance competitiveness, and attract investment. Recognizing the sector’s importance, the National Logistics Policy (NLP) was launched in 2022 to transform India into a global logistics hub.
🔹 What is the Logistics Sector? 🚚
📖 Definition
Logistics refers to the planning, coordination, and management of the movement and storage of goods, services, and information across the supply chain — from raw materials to final consumers.
Components of the Logistics Sector
| Component | Example |
|---|---|
| Transportation | Roads, railways, air, waterways |
| Warehousing | Storage hubs, cold chains |
| Freight Management | Cargo handling, tracking |
| Customs & Documentation | Export-import clearances |
| Technology Integration | Real-time tracking, supply chain analytics |
🔎 Importance of Logistics Sector
✔️ Contributes ~14% to GDP.
✔️ Supports agriculture, manufacturing, services, and trade.
✔️ Critical for supply chain resilience and disaster response.
✔️ Key enabler for Make in India, Digital India, and Start-up India.
🔹 Challenges in India’s Logistics Sector
1️⃣ High Logistics Costs
- India’s logistics cost is ~13-14% of GDP, compared to 8-10% in developed countries.
- Increases export costs, reducing global competitiveness.
2️⃣ Fragmented Infrastructure
- Lack of multi-modal connectivity.
- Poor integration between road, rail, air, and waterways.
3️⃣ Inefficient Processes
- Cumbersome documentation and customs clearance delays.
- Overloaded trucks, contributing to delays and road damage.
4️⃣ Warehousing Deficiency
- Inadequate cold storage for perishables.
- Unorganized godowns with poor inventory management.
5️⃣ Technology Gaps
- Limited digitization across supply chains.
- Poor adoption of IoT, AI, and blockchain for real-time tracking.
🔹 National Logistics Policy (NLP), 2022
📖 Objective
The National Logistics Policy (NLP) aims to:
- Reduce logistics cost to single digits.
- Improve global logistics performance ranking.
- Create a unified digital logistics ecosystem.
- Enhance infrastructure and efficiency.
🔎 Key Features
| Pillar | Focus Area |
|---|---|
| Integrated Digital System (IDS) | Unified portal integrating multiple ministries |
| Ease of Logistics (E-LOGS) | Platform for resolving industry grievances |
| Standardization | Uniform warehouse ratings, vehicle policies |
| Skilling & Capacity Building | Training for drivers, warehouse operators, logistics managers |
📊 Logistics Performance Index (LPI)
| Year | Rank |
|---|---|
| 2016 | 35 |
| 2018 | 44 |
| 2023 | 38 |
Key Parameters of LPI
- Customs efficiency
- Infrastructure quality
- Timeliness
- International shipments
- Logistics competence
- Tracking and tracing
Key Initiatives Complementing NLP
1️⃣ PM Gati Shakti
- Master Plan for Multi-modal Connectivity.
- Combines: ✔️ Roads (Bharatmala)
✔️ Railways (Dedicated Freight Corridors)
✔️ Ports (Sagarmala)
✔️ Airports (UDAN)
2️⃣ Multi-Modal Logistics Parks (MMLP)
- 35 planned parks for: ✔️ Cargo aggregation
✔️ Warehousing
✔️ Custom clearances
✔️ Distribution hubs
3️⃣ Logistics Data Bank
- Real-time container tracking across ports and inland locations.
- Enables predictive analytics for supply chain optimization.
Role of Private Sector
| Segment | Private Participation |
|---|---|
| Logistics Startups | Delhivery, Rivigo, BlackBuck |
| E-commerce Logistics | Flipkart Logistics, Amazon Transportation |
| Cold Chain | Snowman Logistics, ColdEX |
| Express Delivery | DTDC, Blue Dart |
Technological Integration in Logistics
| Technology | Application |
|---|---|
| IoT (Internet of Things) | Fleet tracking, cold chain monitoring |
| Blockchain | Tamper-proof documentation |
| AI & Big Data | Route optimization, demand forecasting |
| Drone Delivery | Remote area delivery (pilot projects) |
🔹 Case Study – Delhi-Mumbai Industrial Corridor (DMIC)
- Largest infrastructure project under Make in India.
- Dedicated freight corridor + industrial zones.
- Multi-modal hubs connecting ports, railways, airports.
- Expected to cut logistics costs by 30% along the corridor.
🔹 Key Benefits of Logistics Sector Reforms
✔️ Reduces supply chain bottlenecks.
✔️ Boosts exports and global competitiveness.
✔️ Attracts foreign investment in manufacturing and logistics parks.
✔️ Strengthens agri-logistics for perishable commodities.
✔️ Creates millions of jobs in transportation, warehousing, and allied services.
📊 Logistics Sector Snapshot (2023)
| Parameter | Value |
|---|---|
| Logistics Cost (% of GDP) | ~14% |
| Total Length of National Highways | ~1.44 lakh km |
| Rail Freight Share | ~30% |
| Port Capacity | ~2,500 MTPA |
| Logistics Market Size | $250 billion |
📚 Practice MCQ
1️⃣ Consider the following statements regarding the National Logistics Policy (NLP):
- It aims to reduce logistics costs to single digits.
- It promotes the development of multi-modal logistics parks.
- It is implemented by the Ministry of Commerce and Industry.
Which of the above statements are correct?
✅ Options:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2, and 3
2️⃣ Which initiative aims to create a multi-modal logistics infrastructure grid across India?
✅ Options:
(a) PM KISAN
(b) PM Gati Shakti
(c) Make in India
(d) Startup India
3️⃣ Which of the following is a logistics-specific index used for global ranking?
✅ Options:
(a) Ease of Doing Business Index
(b) Human Development Index
(c) Logistics Performance Index (LPI)
(d) Global Innovation Index
4️⃣ Consider the following statements regarding Multi-modal Logistics Parks (MMLP):
- They are part of the Sagarmala Programme.
- They provide warehousing, cold storage, and custom clearance facilities.
- They aim to reduce logistics costs and improve cargo handling.
Which of the above statements are correct?
✅ Options:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2, and 3
