Technology May Be Key Driver For Implementing New National Logistics Policy

On Saturday (17 September), Prime Minister Narendra Modi released eight cheetahs into the Kuno National Park in Madhya Pradesh.

By late afternoon, he was back in Vigyan Bhavan, New Delhi, to release the new National Logistics Policy (NLP) in the presence of the heads of dozens of private Indian transportation, packaging and warehousing logistics companies as well as government ministers.

Not someone to miss an opportunity that happenstance throws at him, to evoke a telling comparison, the Prime Minister ended his address with a quip and a hope that goods in India would move with the speed of a cheetah.

In the making, ever since Finance Minister Nirmala Sitharaman first announced it during her 2020 budget speech, the new policy seems at first look, to be hard-nosed attempt to address the multiple procedural problems that have dogged the logistics sector for decades.

Notwithstanding its recognised importance as a key driver of productivity, logistics has remained largely unorganised and operates in separate, uncoordinated silos.

Unified Logistics Platform

There is an unstated realisation and acceptance in the new NLP that the government may be  guilty of a silo mentality. Hence the announcement of a unified logistics interface platform or ULIP, which will offer a transparent single-window platform to provide information in real-time to all stakeholders.

For starters, it will integrate the data sources as well as authorisation, compliance and clearance processes of six Union ministries and will encourage private players to add their layers to the solution.

And picking up a trick or two from the IT industry to shorten the solution cycle, NITI Aayog has announced a hackathon, challenging individuals and  startups to  come up with tech solutions to a laundry list of India’s logistic irritants.

In his opening sentence, Prime Minister Modi summarised what NLP hopes to achieve: “...to ensure quick last mile delivery, end transport-related challenges, save time and money of the manufacturers, prevent wastage of the agro-products.”

It is almost a quarter century since Indian ports began the shift to paperless bills of lading and other documents required, when cargo left or entered Indian seaports and airports.

But export-import hassles loom large as one of the biggest irritants for Indian enterprise.

NLP will work to improve e-sanchit, the tool for paperless EX-IM trade processes and accelerate the (so far tardy) progress towards faceless customs assessment. 

The average turnaround time of container ships has improved from 44 hours to around 26 hours — but even this would be unacceptable for any port that has ambitions of being an international transshipment hub like Singapore.

The new policy will likely address this.

On the air side, 40 Indian airports have cargo terminals, 30 with cold storage, and some 35 new multimode terminals are expected to come up soon.

The cost of logistics as a percentage of India’s gross domestic product or GDP is around 13-14 per cent. To bring this down to 8 per cent is one of the central goals of the NLP.

Ease Of Logistics Services

A new platform launched under NLP is e-Log or ease of logistics services.

This provides industry associations a route to channel their problems or issues with government departments.

Speedy resolution was promised in the Prime Minister’s remarks.

On the domestic interstate front, e-way bills have been made mandatory for goods of value more than Rs 50,000, and implemented progressively between February and June 2018.

But its interpretation by 31 states and Union territories has seen so many instances of misuse, misinterpretation and egregious delaying or confiscation of goods that entire volumes of case law have been generated during these four years.

Hopefully, the new logistics policy will tighten up the interstate goods transport system eliminating avoidance on one hand and bureaucratic high handedness on the other.

FASTags May Be Tweaked

A FASTag for electronic payment and smooth transit through toll booths has been a relatively smoother operation since it was introduced in 2016.

But the pile ups at toll booths continue — and having to cross a toll booth every 50-60 kms on inter-city road travel is a major irritant.

The Road Transport and Highways Minister Nitin Gadkari said last month that a new toll collection system based on actual kilometres travelled on toll highways would soon be in place.

It would eliminate all toll booths but requires all vehicles to be fitted with GPS navigation systems.

The route traversed by a car or goods carrier will be captured by the billing system and the toll deducted form an electronic wallet at exit.

This is the system followed by Singapore’s ERP or electronic ring pricing when vehicles enter the central business district or by London’s congestion charge for entering the city centre.

Though the Prime Minister mentioned FASTag as a successful solution, it may need to be tweaked if the new toll plaza-free system comes into effect.

Gati Shakti Is The Key

If the NLP gets a head start, that would be due to the rollout just under a year ago of PM Gati Shakti.

This is a national master plan for multimodal connectivity, in its essence, an integrated platform bringing 16 ministries including the key ones, railways and roadways together for coordinated implementation of infrastructure connectivity projects.

It will ease last mile connectivity of infrastructure and reduce travel time.

There appears to be some overlap between the two, but it looks now like NLP will piggyback the connectivity (and this includes data connectivity) infrastructure put in place by Gati Shakti.

 Drone As Service

The significant easing of regulations in the Drone Rules 2021 has strengthened logistics providers with another cutting-edge option — and one which proved itself during the Covid lockdowns by carrying medication to  remote and unconnected  hospitals.

Drone-as-a-service has emerged as a new niche and many startup players have created a viable business from this cutting-edge logistics option.

The full scope of the new logistics policy can be gauged only when the formal document spelling it out is in hand.

But from the initial reaction of logistic sector players like R Dinesh, managing director, TVS Supply Chain Solutions; Ramesh Aggrawal, chief executive officer (CEO), Agarwal Packers and Movers and Amitabh Saha, founder and CEO of XpressBees Logistics, the private sector — a critical stakeholder — is enthused.

Private Sector Pioneers

Indeed, the understanding seems to have sunk in that the government can at best play the role of facilitator — and a big customer. 

The creative push must come from the private industry — and indications are there is no dearth of entrepreneurial — even pioneering — push.

Consider these instances:

— Earlier this month, KSH Logistics, an Indian player in integrated supply chain logistics, opened a 10,000 square metre warehouse in Bhiwandi, Maharashtra (near Mumbai), that can be shared by multiple clients — a boon for small and medium enterprises.

It plans to bring such multi-client facilities (MCF) to six more cities within a year, offering a total 70,000 square metres of space.

Clients can integrate their own software with KSH for ease of operation.

— Hyper-local delivery player Dunzo and food delivery players Swiggy and Zomato have obtained Ministry of Civil Aviation approval to use beyond visual line of sight or BVLOS drones for some of their deliveries.

Swiggy is working in the National Capital Region with Chennai-based Garuda Aerospace. Their pilot project is evaluating the use of drones to replenish inventory between seller-run stores and a common customer point for Swiggy's grocery delivery service Instamart.

Meanwhile, cloud kitchen startup Curefoods, has partnered with Skye AirMobility and will attempt to deliver frozen foods via drone in the Gurgaon area.

 — Shadowfax, which claims to be India’s largest last-mile logistics provider, has started an innovative programme called WINGS, using the unused delivery capacities  of regional  or local players like owner-drivers, kirana shop owners, small transport fleets to plug-n-play their services.

— Indian-talent-driven international robotics company, GreyOrange has extended its services from the UK, Germany and Japan to India. Its robotic automation solution for warehouses is used by players like Flipkart, Delhivery, Adidas, Apple and Ikea.

— Warehouse automation is turning out to be the next big opportunity.

Addverb, a leading Indian robotics company, has created a second manufacturing facility in Noida and has recently received funding from Reliance Industries.

The new plant employs 3,000 people and has the capacity to produce 60,000 robots and automated pallets a year.

— MapMyIndia, India’s largest private sector mapping and cartography player, proved its navigation tools during Covid, and today its logistics mapping and real time navigation tools are used by some of the biggest vehicle aggregators.

Such a bedrock of expertise has already attracted the attention of some states which see an opportunity for themselves.

Goa hopes to transform itself into an air cargo-led regional multi-modal logistics hub — and this ambition will leverage its new airport coming up in Mopa. 

To create the right regulatory climate, Goa is also working to digitise pharma logistics and cold-chain regulations and clearances.

It partnered with the Confederation of Indian Industry (CII) last week to organise a brain-storming conference in Dona Paula with industry leaders and other stakeholders, with the Chief Minister and Industries Minister in listening mode.

It was a demonstration of egoless public-private cooperation — and could well be a harbinger of more such collaborations to come in the critical area of logistics.