Logistics: A King Maker In The Indian Economy

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The government of India plans on making an E-marketplace, National Logistics Portal (NLP), that would include all the Logistics players of India at one platform; the announcement was made by Finance minister, Arun Jaitley in his 2018-19 budget.

The ‘proof of concept’ for the same has been approved by Committee of Secretaries. Stakeholders like traders, manufacturers, logistics service providers, infrastructure providers, financial services, government departments and groups and associations will be a part of this platform. The main objectives of the portal are enhanced trade competitiveness, creation of jobs, boost to India’s performance in global rankings and pave the way for India to become a logistics hub.

“In 2017 Logistics Performance Index by World Bank, India jumped 19 places in global logistics performance. It upgraded from 54th to 35th among 160 countries.”

In India, logistics sector comprises 14% of Gross Domestic Product (GDP), much higher than in the US or Europe at 8-9%, according to McKinsey research. According to the Economic Survey 2017-18, the logistics sector provides livelihood to more than 22 million people and improving the sector will facilitate 10 per cent decrease in indirect logistics cost leading to the growth of 5-8 per cent in exports. The survey estimates that the worth of Indian logistics market would be around $215 billion in the next two years compared to about $160 billion now. The potential of the industry and the need to cut cost has been recognized by the govt. Logistics was included in Infrastructure to reduce finance cost and the post of a special secretary in the commerce ministry was created to exclusively handle logistics. The creation of NLP is the next big step for the logistics industry. “India’s logistics sector is very complex with more than 20 government agencies, 40 partnering government agencies, 37 export promotion councils, 500 certifications, 10,000 commodities, $160 billion market size,” according to an official release from commerce ministry.

NLP is a project which could simplify the process for both exporters and logistics agency while cutting cost. This marketplace would lead to reduced logistics cost and better price discovery. It would allow exporters to make an informed choice while choosing a logistics partner; along with providing online certification from 81 regulatory bodies and shipment tracking facility. The first phase of the National Logistics Portal (NLP) is likely to be implemented by March, 2019. Global consultancy major KPMG is preparing the detailed project report for the portal which would be later developed into a mobile application for use by exporters, importers and domestic traders.

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