India’s logistics overhaul with the transformational National Logistics Policy reflects a massive potential waiting to be tapped

India’s mega-plan to overhaul its logistics network by implementing the National Logistics Policy highlights the growing importance and the huge growth potential of the logistics sector.

With firms spending a ton of money on getting their goods off factories or warehouses and shipping them to their destinations, indeed, the logistics costs are way too high. Various estimates peg logistics costs at about 14-15% of the GDP compared to the 7-9% in developed countries like the US and Germany. Factors like infrastructure and other bottlenecks, including tedious paperwork, unnecessarily add layers of inefficiencies to stretched transportation budgets.

For a country that is now the 5th largest economy in the world with plans underway to become a global manufacturing hub and a big exporter of agricultural commodities, logistics is the vital link that will enhance India’s global standing and competitiveness. India’s pivot towards logistics improvement will be the much-needed revamp to bring about a high level of efficiency, and productivity.

Revamping the logistics roadmap

The good news is that the logistics sector is at an inflection point. PM Modi unveiled the National Logistics Policy (NLP) that aims to usher in huge synchronicities in India’s infrastructure and will bring about a national level logistics sector revamp over the coming years. Indeed, NLP will cut the red tape around the logistics industry and usher in better efficiency in the logistics sector.

In fact, the NLP’s targets of dropping costs to less than 10% of GDP is indeed a big step forward and could be the much-needed pivot that will strengthen India’s competitive edge in the domestic and global markets. 

With the aim to integrate India’s logistics infrastructure by creating a new digital system that integrates different systems of various departments, and implementing a Unified Logistics Interface Platform, and E-Logs, a dashboard for Ease of Logistics Services the government aims to streamline regulatory and operational processes. Further, the System Improvement Group will track all logistics and infrastructure projects for planning and clearance.

The NLP aims to implement a Comprehensive Logistics Action Plan (CLAP) consisting of of eight key areas: 1) integrated digital logistics system, 2) standardization of physical assets & benchmarking service quality standards, 3) logistics human resources development and capacity building, 4) state engagement 5) EXIM logistics, 6) service improvement framework, 7) sectoral plan for efficient logistics and 8) facilitation of development of logistics parks. 

The entire logistics value chain will be linked with the aim to improve connectivity; adopt the best of technology; cut down on tedious paperwork and documentation and strengthen and better utilise the warehouse infrastructure.

Digitisation – the big leap forward

The focal point for the government is to utilise and strengthen digital technologies. The government is creating the strong technology backbone to create an integrated national logistics portal, and other networks to improve. Technology will indeed create seamless and paperless connectivity that will link all stakeholders. It will enable real-time cargo tracking and enhance load optimisation and help increase cross-utilisation of expensive infrastructure assets.

The Unified Logistics Interface Platform (ULIP) is one of the key promising initiatives which can be effectively employed by all to bring down cost of logistics in India. This is a platform that can be utilised by everyone including government bodies, local authorities, corporates, service providers, shippers, etc, to enable information exchange on a real time basis in a confidential manner. 

ULIP is a big game-changer for the Indian logistics landscape that will address concerns of manual activities and delayed responses. ULIP is an open-source platform that is both a request and a response-based platform integrating the myriad systems of different stakeholders.

With the digital shift, enhanced speed through optimised networks will mean better utilisation of capital, reduced inventory costs, and lower waste in supply chains. A digital revamp of the existing logistics network itself will also spur better use of assets, enhance multiple cross-utilisation opportunities, and bring about a noteworthy reduction in costs and improve efficiency across the logistics value chain. 

Logistics parks – the gateway to productivity

One important aspect of the NLP is developing multi-modal logistics parks. In fact, multi-modal logistics parks serve as a hub for supply chain activities including freight stations, container depots, and cargo terminals, which enhance storage and handling activities in the supply chain. With the development of logistics parks through private investment, connected with the Gati Shakti initiative, the stretched logistics resources will get a big boost.

The PM Gati Shakti launched last year is a national master plan for multi-modal connectivity to various economic zones. This transformative initiative is to harness and integrate operations through rail, road, ports, waterways, mass transport, airports, and other infrastructure. The government will implement 22 green field expressways, infrastructure products, and 35 multi-modal parks. These parks will be at strategic locations that are well connected with multi-modal modes of transport to enable seamless intermodal freight movement with services such as storage, distribution, freight aggregation, custom clearances, IT services, and other value additions.

Way back in 2006, India embarked on a project that would lay dedicated railway tracks for cargo along the length and breadth of the country. Goods would be transported at 70kmph instead of 25kmph. And freight capacity would double to 13,000 tonnes. It is hoped that the project is likely to be completed by 2024. Another such the initiative was Bharatmala project started in 2015 aimed at creating a massive network of highways in India. It is stated that only 23% is completed and expected to be completed by 2028.  The other part of the multimodal network is the Sagarmala project that aims to harness India’s 7500 km long coastline and 14500 km of navigable waterways. With additional investments in port modernisation, connectivity, and coastal development, the Sagarmala project can benefit industries with high transportation costs.

Cusp of sustained growth

Needless to say, the launch of National Logistics Policy is a key steppingstone policy initiative for the logistics sector. The demand environment for the faster and better logistics sector will remain supported over a longer period due to structural growth drivers such as the NLP. In the past, despite new policy changes such as GST, Atmanirbhar Bharat, FASTag, make in India, and reforms like e‐sanchit paperless EXIM trade process, faceless assessment for customs, provisions for e‐way bills, logistics costs remain noticeably high.

Hence, logistics companies with good business models in the organised space are at the forefront of benefiting from the renewed focus on transportation. Besides, the sector is expected to see an all-round growth across all major segments including rail, road, sea, and air, and better utilisation of supply chain management systems.

In this scenario, companies that harness both technology and infrastructure will be the ones to lead from the front. Logistics firms that utilise and develop cutting edge technology in the logistics sector will gain. Besides, players in infrastructure development that have been announcing capex plans across verticals will also be able to capture the high demand and growth visibility.

The new paradigm is that the logistics sector is at the cusp of sustainable and high growth rates over a long time, and NLP has strengthened the foundation of this core pillar of economic growth.


Dedicated Freight Corridor (DFC).

Way back in 2006, India embarked on a project that would lay dedicated railway tracks for cargo along the length and breadth of the country. Goods would be transported at 70kmph instead of 25kmph. And freight capacity would double to 13,000 tonnes. The initial deadline for completion was 2017. But we’ve delayed it 5 times already. And now, the hope is that we can wrap it up by 2024.

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