National Logistics Policy Reaffirms Modi Government’s Commitment To Tackle Legacy Issues

Governments will come and go, but the Narendra Modi government will be remembered for its technology-oriented thought process to find easy solutions to complex problems. 

The recently launched National Logistics Policy bears every mark of this new era in governance. 

The technology focus was clear from the beginning when the government ended the monopoly of foreign gateways in online transactions and created an easy smartphone-based unified payment interface (UPI) which became extremely popular.  

The goods and services tax (GST) is not merely the biggest tax reform that India had ever undertaken. It is distinct in 100 per cent online compliance that reduced human interventions drastically and freed small enterprises from the hassles (read corruption) of sales tax filing. 

Together, digital transactions and GST (including the e-way bill) opened wider opportunities for e-commerce.

But more importantly, they are helping the government to map the complex downstream economic activities — most of which were unorganised — with more precision than ever. 

The benefits are clear from the user's perspective.

The roadside food vendor now has proof of his income potential, which is a prerequisite to creditworthiness and access to cheaper finance.

The fintech players started offering loans to this segment at a cheaper rate than the traditional microfinance lenders. 

The big business now has better quality data on the demand spots.

The planners now have quality data to fill up the policy gaps to encourage inclusive growth.

The upcoming open network for digital commerce (ONDC) is a perfect example of democratising the benefits of technological advances. 

Information technology czar, Nandan Nilekani feels that UPI, ONDC and the account aggregator framework will revolutionise supply chain management in India.

He is correct but only partially. 

Mitigating Supply Chain Gaps

There are many gaping holes in the system that restrict the efficient physical movement of goods.

The most recent example was the space crisis in the shipping industry that pushed India US container freight by 500 per cent to $15,000, in 2021. 

Officially this was due to a logjam of containers. Empties were hard to find.

Shipping companies blamed the supply disruption created by the Covid pandemic.

Governments and users blamed the shipping oligopoly for creating an artificial crisis for windfall gains. 

The US brought stringent regulations on the shipping industry. Tracking container movements was the primary aim of this move.

However, experts suggest that the US regulator is suffering from data deficiency as it depended on disclosures by the stakeholders. 

The Indian logistics policy is depending on technology to solve this jigsaw.

Delhi introduced passive RFID (radio frequency identification) for toll collection on the highways in 2021.

Additionally, containers were already passive-RFID tagged.

The two are now merged to create a complete vehicle and container tracking interface. 

Passive RFID requires scanning for data capture. It means containers are trackable on the highways.

Over the next six months, 60 odd such yards that account for roughly 90 per cent of the empties will have RFID scanners to log the entry and exit of containers.

The data will be available at the Unified Logistics Interface Platform (ULIP) in real time.  

Logistics efficiency depends on faster turnaround and capacity utilisation.

Every kilometre of the empty run, every little unscheduled delay — be it due to potholes or bribe collection by the law keepers — adds to the inefficiency. 

Add to that the unorganised nature of truck transport; the multiplicity of authorities between the Centre and states; the reticent railway bureaucracy; international rules and conventions particularly concerning shipping — and the problem is far too complex than it meets the eye. 

The logistics policy, therefore, aims to bring all stakeholders under one roof (ULIP), bring transparency in the system through information sharing, fix responsibilities in the state through the creation of nodal points, performance-based ranking of states and, benchmarking activities with international and national best practices. 

The ULIP will break silos in the government.

Line ministries in the central government — like the Ministry of Railways, Highways, Shipping and Waterways, Civil Aviation, Finance etc — will henceforth run short of excuses for delay in action. 

A huge blockchain-based technical intervention is underway to create digital twins of documents to ensure faster movement of files without compromising on national and international legal requirements.

Even remote training of officers is part of the programme.  

Technology Helps

There are a couple of clear takeaways from the logistics policy. 

First, it wants the stakeholder to be a partner in improving efficiency.

ULIP will collect feedback from users on every irritant — like road conditions, excesses by law enforcers etc — thereby forcing authorities to initiate corrective measures. 

The new logistics policy will also democratise the use of costly technology. Just as ONDC aims to bring e-commerce tech solutions to the small entrepreneur; ULIP will offer users a mobile phone-based consignment tracking opportunity, which is now available at a premium. 

The most important gain will come through the creation of a transparent technology-based monitoring system, that will stop the blame game at levels.

The multiplicity of authorities is a fact that India has to live with due to its federal structure.

Technology will reduce the scope of the blame game. 

The use of digital technology can indeed do wonders in logistics.

For decades, the India-Bangladesh land border trade was held ransom by a parking and warehousing cartel at Petrapole in West Bengal.

The average waiting period for India’s export cargo was over 20 days. 

Recently, the West Bengal government introduced an online slot booking system for truckers for fees equivalent to two to four days waiting at the gate.

Truckers now schedule their journey to the gate as per slot availability.

The state government is earning huge revenue. 

The long queue at the border gate vanished overnight, thereby decongesting the road. The local cartels wound up business.

The logistics sector in the country is benefitted by reducing the idling of trucks.