Day 14 – Q 4.Examine the need to have a national logistic policy covering all modes of transport with linkages and complementarities between rail, road and sea.

4. Examine the need to have a national logistic policy covering all modes of transport with linkages and complementarities between rail, road and sea. 

 रेल, सड़क और समुद्र के बीच संपर्क और संपूरकताओं के साथ परिवहन के सभी साधनों को कवर करने के लिए एक राष्ट्रीय रसद नीति की आवश्यकता की जाँच करें।

Introduction:

According to Council of logistics management: “Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming the customer requirement. 

Body 

An effective and efficient logistics ecosystem can be a key contributor to robust economic growth in the country, with the potential to facilitate domestic and foreign trade, promote global competitiveness, enhance incomes, drive the ‘Make in India’ initiative and reduce economic disparities across geographies.

Need of logistic policy in terms of transport

• Transportation seeks to move goods from points of production and sale to points of consumption in the quantities required at times needed and at a reasonable cost. 
• Transportation is one of the most visible elements of logistics operations and essentially concerns the spatial dimension of the business firm. Good transportation has the effect of holding to a minimum of the time and cost involved in the spatial relationships of the firm and add  place utilities to the goods handled and thus, increases their economic value.

Minister of Commerce and Industry has unveiled the draft National Logistics Policy and the proposed action plan for implementation of the policy prepared by the Department of Logistics. The objective of the draft policy 2018 is 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 to double employment in the sector. 

• 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.
• Further, the Survey estimates that the worth of Indian logistics market would be around USD 215 billion in the next two years compared to about USD 160 billion currently.
• 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.
• High logistics cost impacts competitiveness of domestic goods in the international markets. India ranks India, which was ranked 58th in the annual Global Competitiveness Index is among the worst-performing BRICS nations along with Brazil. 
• Ranked 44 in the World Bank Logistics Performance Index 2018, logistics costs in India are 13-15 per cent of the product cost, while the global average is six per cent.
• While the conventional view of demand in the logistics sector states that it is derived demand, growth in transport and logistics enterprises can create markets for other goods.
• Efficient logistics networks can reduce divergence in regional growth.
• Transportation services form a third of the cost of a logistics chain. Improving transportation would require the coordinated development of railways, roads and waterways.
• Roads carry about 60 per cent of the freight cargo in India. As rail transportation is more energy efficient than road, movement of goods via the road-cum-rail mode could reduce logistics costs considerably.

Recent initiatives for capacity augmentation

• The Dedicated Freight Corridors (DFCs), which have been envisaged to augment rail freight transpporattation capacity, particularly on the Eastern and western Corridors 
• The Bharatmala Pariyojana is unique and unprecedented in terms of its size and design, as is the idea of developing ports as engines of growth under Sagarmala (help connect places of production with markets more efficiently, help reduce logistics costs, create jobs and promote regionally balanced socioeconomic growth in the country).
• Constitution of National Council for Logistics, chaired by the Prime Minister.
• Creating the Center for Trade Facilitation and Logistics Excellence (CTFL)  Setting up a big data enabled logistics data hub and analytics center  
• Creating a single window logistics e-marketplace.
• Providing viability gap funding for select MMLP projects, first and last mile projects and projects for poorly-serviced remote areas.
• Federation of Indian Export Organisations ‘Logix India’ event organized to improve logistics cost effectiveness and operational efficiencies for India’s Global Trade.

Conclusion

India must adopt a holistic approach in designing integrated transport networks. Hierarchical connectivity, intermodal access and fit-for-purpose network standard should be emphasised. Network expansions and capacity enhancement must be assessed for their impact on the existing network and within and across networks.