Introduction
India's economic competitiveness has long been hindered by high logistics costs, which currently account for around 13–14% of GDP—significantly higher than global benchmarks like China (8%) and Germany (7%). This inefficiency affects everything from agricultural supply chains to industrial exports, making Indian goods less competitive in global markets.
In September 2022, the Government of India launched the National Logistics Policy (NLP) to address these concerns. It seeks to develop an integrated, technology-enabled logistics ecosystem aimed at reducing cost, improving service delivery, and boosting efficiency across sectors.
Background: Why Was the Policy Needed?
1. High Cost of Logistics
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India's logistics cost is much higher than many developed economies, mainly due to fragmented transport systems, inefficient warehousing, and regulatory bottlenecks.
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Over 60% of freight moves by road, which is costly, instead of the more economical railways or inland waterways.
2. Poor Logistics Performance
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India ranks 38th out of 139 countries in the World Bank’s Logistics Performance Index (2023).
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Lack of last-mile connectivity, port congestion, and manual paperwork cause delays and losses.
3. Sectoral Impacts
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Agriculture suffers due to post-harvest losses (up to 20%) caused by poor cold storage, delays in transport, and inefficient procurement.
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MSMEs and exporters face rising compliance costs and delivery delays, reducing global competitiveness.
Key Objectives of the National Logistics Policy
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Reduce logistics costs to 8% of GDP by 2030.
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Ensure multimodal connectivity through integration of road, rail, air, and waterways.
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Digitize and integrate logistics platforms to improve coordination between stakeholders.
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Promote sustainable and green logistics, including battery-operated freight vehicles and eco-friendly warehousing.
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Strengthen last-mile delivery and reduce urban freight congestion.
Major Components of the National Logistics Policy
1. Unified Logistics Interface Platform (ULIP)
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A digital backbone that integrates over 30 systems from seven ministries, including road, rail, customs, and aviation.
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Allows real-time tracking of cargo, single-window documentation, and seamless data exchange.
2. Logistics Services Improvement Framework (LSIF)
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A benchmarking tool to assess and improve logistics performance at the state and district levels.
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Encourages states to compete in building better logistics infrastructure.
3. Comprehensive Logistics Action Plan (CLAP)
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A detailed roadmap that focuses on:
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Standardizing logistics infrastructure.
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Creating data-driven decision systems.
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Promoting skilling and capacity building.
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Ensuring faster clearance at ports and customs.
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4. Integration with Gati Shakti
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NLP is aligned with the PM Gati Shakti Master Plan, which maps over 1,200 layers of infrastructure to optimize multimodal logistics networks.
Agriculture and Rural Impact
1. Cold Chain and Storage Infrastructure
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NLP aims to improve cold storage connectivity, especially from farm gate to mandis and markets.
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Reduces wastage of perishable crops like fruits, vegetables, and dairy.
2. Rural Logistics Hubs
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Development of rural logistics parks under NLP can help farmers and FPOs (Farmer Producer Organizations) to access markets efficiently.
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Enables better price realization and direct export linkages.
3. Integration with e-NAM
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NLP complements the electronic National Agriculture Market, allowing farmers to link seamlessly with buyers across states.
Benefits to Industry and Economy
1. Boost to Manufacturing and Exports
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With lower logistics costs, Indian manufacturers become more competitive in global markets.
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Especially supports sectors like textiles, electronics, auto components, and pharmaceuticals.
2. MSME Empowerment
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MSMEs face the biggest hurdles in logistics due to scale disadvantages.
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NLP enables shared warehousing, digital freight matching, and logistics skilling, reducing MSME burden.
3. Job Creation
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Logistics currently employs over 22 million people; NLP will expand this with new roles in supply chain analytics, warehousing, drone logistics, and more.
Challenges in Implementation
1. Inter-State Coordination
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Logistics is a multi-jurisdictional function, involving central, state, and municipal bodies. Coordination remains a hurdle.
2. Need for Private Investment
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Upgrading logistics infrastructure like ports, rail terminals, and warehouses requires massive investment.
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Public-private partnerships (PPPs) must be encouraged.
3. Skilling and Capacity Building
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Only 4% of logistics workers are formally trained. Skill gaps must be filled to achieve policy goals.
The Way Forward
1. Strengthen State Logistics Policies
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States must align their own logistics visions with the national plan.
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Encourage competitive federalism through ranking and performance audits.
2. Focus on Green Logistics
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Develop electric freight corridors, green warehouses, and use of solar energy in logistics hubs.
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Encourage modal shift from road to rail and waterways.
3. Use of Emerging Tech
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NLP should promote AI-based route optimization, blockchain for cargo security, and IoT for real-time tracking.
4. Empower Rural Logistics Networks
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Establish agri-logistics corridors and train FPOs in warehousing, packaging, and digital documentation.
Conclusion
The National Logistics Policy represents a bold and much-needed step toward transforming India’s supply chain ecosystem. With ambitious targets and smart digital integration, it lays the foundation for cost-effective, fast, and reliable logistics that can power India’s vision of becoming a $5 trillion economy.
Its success, however, will depend on effective inter-agency coordination, private sector participation, and sustained political and bureaucratic will. If implemented well, the NLP can truly make Indian goods globally competitive, unlock rural prosperity, and make ‘Make in India’ a global reality.