Prime Minister Narendra Modi launched the National Logistics Policy (NLP) on 17th September 2022 in Vigyan Bhawan, New Delhi. The policy aims to lower the cost of logistics from the existing 13-14% and lead it to par with other developed countries.  It will increase the competitiveness of Indian products in and it will reduce cost and increase efficiency across all sectors of the economy, which encourages value addition and enterprise.

It took 8 years to develop a policy that can make quick last-mile delivery, ending transport-related issues, saving manufacturers time and money, and preventing wasting agricultural products. It will boost sector speed, value creation, and entrepreneurship.

Main Goals of Policy:

The Government seeks to reduce the logistics cost from 16 % of Gross Domestic Product (GDP) to a global average of 8 % by 2030. Further, as per the estimates, the worth of the Indian logistics market will be around $ 215 Bn in the next two years compared to $ 160 Bn. Investment Information and Credit Rating Agency of India Limited (ICRA) has also that the sector will develop at a Compound Annual Growth Rate (CAGR) of 10.5 % through 2025 after growing at a CAGR of 7.8 % over the past five years. Currently the sector employs more than 22 million people in India, which through skill development is expected to grow at the rate of 5 % in 5 years.

The four significant steps to be undertaken for NLP include:

The programme also aims to ensure that logistical problems are minimized, exports increase significantly, and small businesses and the people who work in them gain profit. All this will augment the economy in various ways like employment generation, inter-state, and international exchange of goods. This policy move will bring India closer to becoming a global manufacturing powerhouse and pave its way to becoming a logistics hub.

The NLP's transformational capacities further increase when combined with previous connectivity and infrastructure improvement programs like:

• The Gati Shakti Programme's goal is to implement infrastructure connectivity, including roadways and railways projects across the nation, in a coordinated manner.
• The Sagarmala - envisions using the potential of the coastline and waterways to reduce the amount of infrastructure needed to reach their targets.
• The Bharatmala - focuses on reducing critical infrastructure gaps to increase the effectiveness of road traffic circulation across the nation.

The above core initiatives will help create a single window e-marketplace as a one-stop shop for relevant knowledge and information exchange that can ease logistics facilitation matters in the country.

There have been some noteworthy changes in the Indian ports already, as the capacity of Indian ports has increased significantly, and the average turnaround time for cargo ships has decreased by 18 hours. 40 air cargo ports have been built to increase exports, and 30 airports have been equipped with cold storage facilities. There will soon be 35 multi-modal hubs nationwide, enabling seamless freight movement. The development of waterways is a direct response to the pressing need for environmentally friendly and cost-effective transportation alternatives.

Key sectoral Companies to get benefit from these are:

India's latest policy of Comprehensive Logistics Action Plan (CLAP), provides details and a push to the NLP's specific targets focusing on reducing India's logistics cost to a level comparable to global benchmarks by 2030 and aims to be among the top 25 countries by 2030 in the Logistics Performance Index (LPI) (according to the World Bank Logistics Index of 2018, India is ranked 44th in logistics cost).

To sum up, it can be said that NLP will promote the facilitation of a unified regulatory environment and institutional framework governing the sector that will set up multi-modal logistics parks (MMLPs) as key markets. That will ensure faster first and last-mile connectivity, and as logistics improve, the export-import, manufacturing, cold storage, and industries will also grow. One should consider giving some weightage to the stocks related to this sector.

- HET ZAVERI

info@smartinvestment.in

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