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State PCS

Mains Practice Questions

  • Q. “The National Logistics policy (2022) is an endeavor to improve the competitiveness of Indian goods and increase employment opportunities”. Discuss (250 words)

    19 Oct, 2022 GS Paper 3 Economy

    Approach

    • Introduce by discussing the National Logistics Policy.
    • Discuss the significance of National Logistics Policy.
    • Conclude accordingly.

    Introduction

    • Logistics encompasses planning, coordinating, storing, and moving resources —people, raw materials, inventory, equipment, etc., from one location to another, from the production points to consumption, distribution, or other production points.
    • The term "logistics" describes the total process of controlling the acquisition, storage, and delivery of resources to their intended location.
    • It entails locating potential distributors and suppliers and evaluating the viability and accessibility of such parties.

    Body

    • National Logistics Policy:
      • The policy focuses on key areas such as process re-engineering, digitisation, and multi-modal transport.
      • It is a crucial move as high logistics cost impacts the competitiveness of domestic goods in the international market.
      • The main motive of the new policy is to promote the seamless movement of goods by focusing on some key areas like process re-engineering, digitisation and multi-modal transport.
      • Goals:
        • Logistics costs have to be cut by half to be near global benchmarks by 2030 by reducing the cost of logistics from 14-18% of GDP to global best practices of 8%.
        • Being the 5th largest economy in the world, India aims to be among the top 10 in the LPI (Logistics Performance Index) by 2030. It has to match the pace of South Korea..
        • Creating data-driven Decision Support Systems (DSS) to enable an efficient logistics ecosystem.
    • Significance of National Logistics Policy:
      • With the launch of the National Logistics Policy PM Gati Shakti will get further boost.
      • The Policy will help make an integrated, cost-efficient, resilient, and sustainable logistics ecosystem in the country as it covers all bases of the sector along with streamlining rules and addressing supply-side constraints.
      • Ease of logistics service, a new digital platform, will allow industry to directly take up operational issues with government agencies for speedy resolution.
      • Digital Integration System: It will lead to seamless and faster workflow, making logistics significantly more efficient.
      • Unified Logistics Interface Platform: It aims to collapse all logistics and transport sector digital services into a single portal, thereby freeing manufacturers and exporters from the present tyranny of long and cumbersome processes.
      • The need for a national logistics policy was felt since the logistics cost in India is high as compared to other developed economies.
    • Improve the competitiveness of goods and generate employment:
      • Countries like the US, South Korea, Singapore, and certain European nations have a low logistics cost-to-GDP ratio., i.e., around 7-8%, whereas the current cost of India is 16% of GDP, thus by improving the cost to GDP ratio, it would increase the competitiveness of Indian goods in domestic as well as international market.
      • Currently, Indian logistics sector provides livelihood to more than 2.2 crore people and with this policy in place, now much greater number of people are expected to join the sector.
        • Further, the efforts of the Central Government, the state governments and the private sector together, may create huge job and entrepreneurial opportunities for thousands of people who are willing to try their luck on businesses.
      • The policy would result in a big motivation for the industries and generate more profit for them, which will invariably benefit the employees also in terms of salary and other benefits, besides creating thousands of new jobs for the youth, when businesses expand.
      • The policy would also be highly beneficial to the farmers of the country, helping them to take their produce to the markets at a faster pace and reduce wastage and delay.

    Conclusion

    The National Logistics Policy will facilitate a unified policy and regulatory environment for end-to-end logistics services and an overarching institutional framework that will govern the logistics sector and enhance its competitiveness.

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