Prepping India to be among the Top 25 in Global LPI

A strengthened logistics ecosystem is going to form the backbone of India’s $5 trillion economy vision. Government of India’s vision to expedite the development of an integrated logistics ecosystem is reflected in the scale of decisions and initiatives which have been undertaken in the recent past. The government is now adopting specific strategies to improve the global competitiveness of Indian goods by targeting to position itself among the top 25 countries in the Logistics Performance Index (LPI), reducing logistics cost comparable to global benchmarks and creating a technology enabled and data-driven logistics ecosystem in coming years, as highlighted in the recent report by DPIIT. Our panel discussion on ‘India getting on top 25 countries in the world on the LPI’ hosted during our maiden Digital Supply Chain & Logistics Forum in New Delhi recently, offered insights into the government’s intent and action plan to reach the goalpost and laid down steps for the industry stakeholders to be the equal partners in progress. With an eclectic mix of panellists from the industry, policy making and consulting firms, the panel struck a balancing act to bring about the transformation…

I was completely fascinated with the way the hon’ble Finance Minister Nirmala Sitharaman started her Union Budget 2023-24 speech stating that the Budget is focused on ‘Saptarishis’, entailing that the Budget adopts seven priorities – Inclusive Development, Reaching the Last Mile, Infrastructure and Investment, Unleashing the Potential, Green Growth, Youth Power, and Financial Sector – to guide India through the ‘Amrit Kaal’. Some of these priorities are holistically interlinked with the supply chain,” these opening remarks by Manu R Bhalla, Director & Global Head – CL, Freight Systems Group and President – WAI, moderator for the panel, brilliantly set the pace of the event.

A recently released report by logistics division of the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, highlighted that India envisions a US$ 2 trillion export figure by 2030. As a result, the Government has been taking a number of initiatives to spur export trade, support domestic consumption and bring in logistics efficiencies. Given the high Logistics cost in India, competition in global markets becomes extremely challenging and thus more scientific approach has been adopted by the Government of India (GOI) to create a Cost Effective, Data Driven and Technically Robust Logistics Ecosystem across the country. PM GatiShakti and recently launched National Logistics Policy, in particular, along with many other initiatives such as Unified Logistics Interface Platform (ULIP), E-LogS – Dashboard for Ease of Logistics Services, Standards for Warehousing and physical assets and Training Courses on IGoT Platform are aimed at holistically developing Logistics Ecosystem.

Given the federal system of our country, States & UTs are the most important partners and have a critical role as enablers and work in tandem alongside the Central Government for implementation of these initiatives. Monitoring / audit of various sectors, identifying impediments and recommending course correction to streamline processes is thus a reliable mechanism to bring in efficiencies. Thereby since 2018, the Logistics Division, DPIIT, Ministry of Commerce & Industry, has undertaken an annual “Logistics Ease Across Different States (LEADS)” survey in all States/ UTs to assess logistics ecosystem in the country at State/UT level. It’s a combination of perception and objective data to arrive at a grading system for States/UTs using a statistical model. It further assesses viewpoints of various users and stakeholders in the value chain (through perception survey) to identify bottlenecks and suggest appropriate measures to rectify the same. LEADS acts a feedback mechanism for the administrative ecosystem to take a coordinated approach to develop cost effective and efficient logistics system. LEADS 2022 focused on indicators introduced across three established pillars – Infrastructure, Services and Operating & Regulatory Environment. These pillars are further divided into 19 indicators.

Envisaging the need of a network-wide collaboration on a marble-cake federalism theme, Government of India has launched the National Logistics Policy (NLP) on 17th September 2022, which is envisioned to guide States/UTs in formulating and implementing their respective Logistics Policies. The Policy will be implemented through a Comprehensive Logistics Action Plan (CLAP) that proposes interventions in key action areas of Integrated Digital Logistics Systems, Standardization of Physical Assets & benchmarking service quality standards in warehousing sector, Logistics Human Resources Development and Capacity Building, State Engagement, EXIM Logistics, Service Improvement framework, and Sectoral Plan for Efficient Logistics. These key pillars are intended to boost EXIM as well as domestic trade and help reduce logistics costs.

Giving insights into the same, Mihir G. Shah, Partner – Strategy and Transactions (SaT), Government & Public Sector, Ernst & Young LLP, highlighted, “The government machinery is working at a granular level to define every nuance that will impact the logistical efficiency. They are constantly working with the private players to understand the challenges they are facing. While the intent of the government is clear in the form of policy formulation, we are also witnessing equal action on the ground. There are multiple domains in which the regulatory machinery and the industry are collaboratively working to mend the gaps.”

While NLP will strengthen Logistics Services and Systems, Government of India’s pioneering initiative of the PM GatiShakti National Master Plan (PMGS-NMP) will focus on creation and improvement of multimodal logistics infrastructure in coordination with States/UTs and their agencies under one common platform unifying all decision-making levels, by removing silos. PMGS-NMP is a transformative approach towards integration and synchronization of efforts, prioritization of projects and optimization of cost and time so that the lack of coordination in infrastructure projects does not result in time and cost overruns.

(ULIP) and E-Logs initiatives are two key pillars of NLP. ULIP is conceptualized to provide an integrated platform that can be effectively utilized by the stakeholders to enhance efficiency, utilize technology, and reduce the cost of logistics in India while E-Logs – is a dashboard for ease of logistics services envisages registering, coordinating, and monitoring resolution of logistics stakeholders’ issues. E–handbook on Warehousing Standards recently published by DPIIT, intends to bring in standardization of physical assets and benchmarking of Service Quality Standards by adoption – of incentives, system of grading, rating, and certification of excellence to promote optimization of assets and minimize handling of risks.

According to Manu R Bhalla, “The National Logistics Policy (NLP) encompasses all aspects of the supply chain such as transportation infrastructure and technology to provide cost-effective, sustainable, and robust multimodal solutions with real-time visibility to industry stakeholders. The policy will complement the PM GatiShakti National Masterplan, will facilitate investment in warehousing and logistics infrastructure, dovetailing into Make in India alongside the Aatmanirbhar Bharat initiative. The vision is to develop a technologically enabled, cost-efficient, resilient, sustainable, and trusted logistics ecosystem for accelerated and inclusive growth. The policy includes a detailed action plan to achieve reduction in logistics cost in India, to be in the top 25 countries in the Logistics Performance Index ranking by 2030, and to create data-driven decision support mechanism for an efficient logistics network. Several initiatives under the policy, including Unified Logistics Interface Platform (ULIP), the Ease of Logistics Services platform, e-handbook on Warehousing, training courses on PM GatiShakti Masterplan, and logistics on IGoT, were launched along with the NLP. All these initiatives will help facilitate the digital transformation of the Indian logistics and supply chain ecosystem, thus enabling integration with the global value chains in an efficient and cost-effective manner.”

With this as the backgrounder, here's presenting the narrative of industrycstakeholders on what it takes to be among the top 25 countries in the LPI Index…

What are the salient features of the NLP that would help the country reach the LPI goalpost?

Pritam Banerjee, Logistics Sector Specialist, Asian Development Bank:

NLP is an integral part of PMGS and includes a broad range of policy reforms needed to complement infrastructure development under NLMP. The underlying focus of the NLP is on procedural and regulatory reform and on enabling digital solutions to address impediments to efficient logistics operations. Given the sheer multiplicity of laws and regulations and associated enforcement touchpoints across the logistics chain, this is no mean task. The government must be commended for coming up with this comprehensive policy framework for coordination and collaboration between ministries and with States.

Even more welcome is that the NLP is focused on some critical objectives that are central to transforming the logistics ecosystem. These include targeted interventions for the optimization of capacity utilization of logistics infrastructure and driving greater standardisation in logistics equipment and facilities that will lead to enhanced interoperability across the logistics chain, especially between different modes.

Perhaps one of the most important aspects in the NLP is making modern logistics services accessible to even small and medium entrepreneurs. The digitalisation focus in the NLP will play a critical role in helping achieve this objective. The Unified Logistics Interface Portal (ULIP), launched by DPIIT, is developing a digital stack integrating all systems and platforms relating to logistics operations. This will allow service providers, including start-ups, to develop multiple applications to support logistics operations with minimal effort and at low costs. This, in turn, will allow these applications to be made available to users at very low cost, ensuring their adoption by the smallest of players.

Take, for example, the ability to track and trace consignments in realtime. Currently, only large logistics firms provide such value-added service to their customers for a premium. But ULIP will allow a start-up to leverage connectivity with the National Highway Authorities’ FASTag that would allow near realtime tracking of a truck on its journey, or a rail wagon through the Railways Freight Operations Information System (FOIS) and provide simple mobile-based track-and-trace services. The process of cooperative federalism envisaged in the NLP will help drive greater standardisation in administrative processes and enforcement across States.

The NLP also institutionalizes an independent ranking of logistics performance of states in the form of the annual Logistics Ease Across Different States (LEADS). This would be a perfect nudge to the states to bring greater focus on logistics related issues. Another important element in the NLP is the commitment to develop State and city specific master logistics plans. These would be critical to complement the national master plan development in the PMGS Master Plan.

Another focus area that I would like to bring your notice to is develop MMLPs across the length and breadth of the country with full vigor. It focuses on optimising efficiency of freight and passenger movement across the country by bridging critical infrastructure gaps through effective interventions such as economic corridors and multimodal integration through roadways, logistics parks, ports, and ropeways among others. The Union Road Ministry has mandated National Highways Logistics Management Limited (NHLML) to execute MMLPs and implement connectivity, including links to ports. The progress on this front has been impressive so far.

Sectoral logistics plan is another interesting concept. A few key sectors account for the bulk of logistics-related activities. Development of sector-specific logistics plans and their integration with the national and State logistics plans would go a long way in ensuring that the critical logistics needs of important sectors are taken care of. This would also help reduce the cost of these key commodities, directly benefiting the pocketbooks of Indian businesses, farmers, and consumers. We must realize one thing, that it’s a transition journey from point zero to reach to economies of scale. The pace at which we achieve this transition is also a major focus area that the government is looking into. This also depends on the maturity of the industry. We are at an inflection point where we will be able to achieve that.

Kindly enlighten us on EoDB and LPI…

Manu R Bhalla: To accelerate investments and help achieve the creation of better warehousing facilities in the country, it is crucial to attract businesses and institutions in the sector. Amongst other factors, the Ease of Doing Business (EoDB) and Logistics Performance Index (‘LPI’) act as a barometer for investors and have a likely impact on investment as better EoDB and LPI ranking may translate to higher foreign direct investments in the sector. The persistent policy efforts led to a significant improvement in India’s rank from 142 in 2014 to 63 in 2022 with a notable progress of jumping by 79 ranks. The government’s objective of reducing logistics cost from an estimated 13-14% of the GDP to 9% through the introduction of a National Logistics Policy is another welcome step in this direction. While EoDB deals with various aspects of doing business and the related permits in India, the World Bank also measures the logistics performance of a country through a specific index called Logistics Performance Index (‘LPI’). Owing to availability of sea routes via the harbours located along its coastline and efficient access to transportation hubs, India has been considered as a top performer in terms of LPI. 

However, despite the above, the rankings have witnessed a decline compared to past performance. Considering India’s aim to be in top 25 rankings in LPI, significant policy thrust, and reforms are the need of the hour for improving the rankings. This shall also include policy efforts towards warehousing sector given that it forms an integral and important part of the logistics industry. To add on to this, the Logistics Ease Across Different States (‘LEADS’) report also ranks Indian states and union territories to increase competitiveness, to boost efficiency and promote healthy competition amongst them in logistics sector. This is likely to bring further efficiencies and catalyse the achievement of a US$5 trillion economy for India.

Pritam Banerjee: When we are talking about the LPI Index, let us not forget that it is perception based. All these surveys are often filled up with reference to the most recent experiences and these experiences are often based on a single instance. This is where the government is working because they have to address the concerns that the industry is facing today. While the government might be working full throttle on creating impeccable infrastructural landmarks, but if there is one single choke point that stalls the truck for six hours on the way to the port, that’s where the government needs to be put its energies on – to eliminate such crucial choking points. We all agree to the fact that GST has streamlined the way businesses function, but the system isn’t full proof yet. Companies are facing lot of challenges in the system. The last mile simplicity still is a faraway dream for India. Having said that, it’s heartening to see the government engaging with industry to address these issues and is taking due corrective actions.

Vinod Sharma, Honorary Secretary, Federation of Freight Forwarders’ Associations in India (FFFAI): 

We would like to appreciate the fact there is a constant dialog between the government and the industry to streamline logistical inefficiencies. We are in continuous discussions with the shipping ministry regarding the challenges we are facing, and they have been highly receptive and are taking actions to provide a conducive environment to freight forwarders. I don’t see a reason that can challenge India to reach among top 25 countries by 2030 as far as LPI is concerned. I would like to specially mention the government’s Mission GatiShakti which has taken every stakeholder into consideration while drafting the same. This is not all… they are constantly improvising the Action Plan to suit the requirements of every stakeholder, which is a highly positive sign. It’s credible that all the ministries be it – Commerce or Finance, or Shipping, are actively engaging with us to understand the nuances of the business and take course corrections.

The government’s approach is extremely positive and business friendly. The government machinery is highly receptive to the industry feedback. The intent of being ‘Aatmanirbhar’ has changed the focus from being import centric to export centric. Because of this positive approach, we are also witnessing a greater interest from the global companies to come and setting up base here. There has been a clear mandate from the Shipping Ministry where it has asked all major ports to ensure adequate infrastructure by 2025 for achieving zero waiting time for inward as well as outbound cargoes, ie ship, rail, truck carrying cargo to and from port should not be required to wait. In an office memorandum, the Ministry of Ports, Shipping and Waterways (MoPSW) noted that port capacity required in 2047 will be around six-times of the present port capacity. As per the plan, major port authorities need to prepare a comprehensive master plan 2047 for the entire port area including cargo projections, warehousing, etc., with ultimate aim to achieve efficient logistics for enhancing economic development. All of these initiatives are intended towards achieving India’s share in global trade to 10% by 2047.

Malik Shah, SVP – Supply Chain, DCM Shriram Ltd.: 

India’s goal to reach $5 trillion economy by 2025 against the current $3.18 trillion cannot be achieved without developing world-class logistics infrastructure. While we have been hearing from all the fronts that our country is on the right path to achieve the above target and we are improving on our infrastructure development capabilities; we are collectively working towards reducing the logistics cost and enhancing the last mile delivery, I am more worried about the pace at which it is shaping up. This tough target to take economy to US$5 trillion will only be possible by increasing the exports, enhancing manufacturing competitiveness and the biggest catalyst to this growth would be logistics. As industry stakeholders, we must reduce our logistics cost from the current 14% and bring it to global standards, which is to the tune of 7–8% of GDP.

Your insights on warehousing and its enabling role in enhancing India’s competitiveness on LPI…

Manu R Bhalla: The PM GatiShakti National Master Plan is critical for the warehousing & logistics sector as it considers logistics infrastructure as a critical component for economic growth and sustainable development. The Master Plan aims to create a world-class modern infrastructure and logistics synergy among different modes of movement – both of people and goods – and location of projects. Through creation of infrastructure and improved logistics efficiency, the country can benefit in terms of reduced logistics costs, higher productivity and throughput times. This shall help accelerate economic growth and development of India.

Warehousing is widely regarded as the bridge between the manufacturers/ traders and the ultimate consumers. In addition to this, warehousing ensures ready availability of goods thereby decreasing lead time, providing adequate storage solutions for stocking of goods and enables safe upkeep of inventory.

The role played by the warehousing and logistics sector during the Covid-19 pandemic is a testament to the importance of this sector in the economy. Adequate warehousing facilities coupled with an efficient logistics mechanism is the key to sustain the flow of goods and meeting consumer demand across the spectrum of the country. The critical role played by the warehousing sector has also been recognized in the National Logistics Policy (‘NLP’) and is being given due credence by the Central as well as State governments wherein NLP is expected to augment warehousing capacity and enable faster communication to take products closer to their consumption points. A PIB release highlighted that 14 states have already developed their respective State Logistics Policies on the lines of the National Logistics Policy and for 13 States, it is in the draft stage.

With the advent of e-commerce and a push towards the revamp of supply chains across the globe in a post pandemic

world, the need for adequate and quality warehousing that is sustainable and resilient is critically acknowledged more than ever. It is thus imperative that the warehousing sector be developed to cater to the requirements of a rapidly growing economy and address the need for adequate facilities to serve the increased economic activity alongside ancillary demand arising out of it. Also, the need of the hour is to evaluate the emerging trends in warehousing, adoption of technology and the policy initiatives that can help realize the true potential of the sector in India.

What is the roadmap the government has put together for the improvement of LPI?

Pritam Banerjee: As policies such as the production liked incentives (PLI) attract FDI, linkages with global value chains will need to be supported with improved maritime and air connectivity with the rest of the world. With such impressive growth in the pipeline, the current models of static planning for connectivity infrastructure would be inadequate and would indeed emerge as a major bottleneck for growth and economic expansion. As a continentsize economy, efficient logistics and connectivity are critical for India’s economic competitiveness. Unlike other large countries like China and Brazil,

India’s economic activity is not centered around coastal regions and ports, and its growth is underpinned by economic activity in the hinterland. Thus, the need for efficient logistics servicing the entire country underpins the development of national production networks, not to mention effective access between hinterland and gateway ports and airports that connect Indian businesses with the global economy.

I believe that the planning model will have to shift from the current top-down and largely framed by the transport line Ministries, i.e., Ministry of Road Transport and Highway (MoRTH), MoR, Ministry of Civil Aviation (MoCA) and Ministry of Ports, Shipping and Waterways (MoPSW), to one that is more bottom-up, with a clear understanding of the alignment of industrial zones, mines, agro-clusters, warehousing clusters, logistics parks, inland terminals and gateway ports. This requires a significant investment in institutional development that can make this new bottom-up approach work. The first step towards developing robust bottom-up planning and implementation mechanisms is having access to the granular details of existing and planned industrial, agricultural, urbanisation related developments. This

is easier said than done. An effective response to different location specific cases would also need alignment with the respective State governments. Individual States would have their own respective infrastructure development plans focused on connecting their industrial or agricultural hubs with the planned national trunk infrastructure. This means the institution responsible for national master planning will require effective lines of communication with State government agencies on a regular basis.

Given that State governments themselves are large bureaucracies with infrastructure responsibilities spread across departments and agencies, meaningful dialogue between the national level master planning institution and State governments would need to be mediated through a preidentified single-point of contact in every State government that is empowered to coordinate with other State government agencies and respond to the requests for information or project management emanating from the Centre.

All of this means that this master planning exercise is not just a simple matter of having some form of committee of senior officials of relevant transport ministries who coordinate the mode specific development plans or road, rail, inland water, and ports and shipping infrastructure. To be truly effective, and responsive to the genuine connectivity needs of all the economic activities powering India’s growth, this institution would have to develop substantive capacities for collecting micro-level data on demand for connectivity from multiple sources and technically analyse this data to ensure maximum impact. The breadth of vision and ambition of the GatiShakti initiative, as outlined by the Prime Minister Narendra Modi, indicates that all of these elements of institutional capabilities are included in the design of this initiative. There is a radical change underway.

Besides, it’s heartening to see the government laying major impetus on involving private sector in driving the growth ahead. In order to promote the same at the gateway ports, the government has devised a mechanism where the investments can be facilitated quickly and efficiently without any challenges. When it comes to minor ports in the hinterland, the role of respective state governments is crucial and again GatiShakti will prove to be an enabling policy. Lack of effective intermodal coordination leads to costlier transportation of essentials in India. For example, bulk commodities like foodgrains should typically move by rail and not roads. While the last mile movement from rail facilities to godowns and shops will always be by road, this road leg should be minimized as much as possible. But poor planning and coordination means that adequate infrastructure to move and handle commodities such as food-grains by rail is often found to be missing. With proper coordination and intelligent master planning using geospatial data, PMGS will fill these gaps to ensure that over dependence on road for bulk commodity movement is reduced. These savings will directly impact the cost of goods such as food grains and have a positive impact on the house-holders budget!

The use of environmentally friendly modes of transport such as inland waterways and coastal shipping remain significantly underused. One reason is the lack of adequate last mile road and rail linkages with locations where inland water terminals or smaller ports for coastal shipping that discourages the growth of traffic in these modes. PMGS intends to address these gaps by giving priority to strategic development of inland waterways and coastal shipping. The reduction in pollution due to the use of these models over road or rail would help improve the quality of life of citizens.

PMGS brings greater focus on the proactive development of Logistics Parks, including Multi-modal Logistics Parks (MMLPs) linked to national highways, major rail arteries and dedicated freight corridors. Such logistics facilities build in scale would bring down the cost of modern logistics services, making them affordable for India’s small businesses and farmers. PMGS led transport infrastructure development will help the rapid development of industrial corridors and industrial parks linked to them. Such industrial parks provide so called ‘plug and play’ facilities, in other words, ready to operate factories where the prospective investor needs to simply bring in their machines and workers to start production.

What’s the government’s action plan to boost competitiveness in port logistics?

Vinod Sharma: There’s no denying the fact that to boost exports, port logistics must improve. India has been making concerted efforts to expand its merchandise exports footprint. And rightly so, as exports act as an engine of growth. The objectives of production linked incentive (PLI) schemes, or of India becoming a part of the global value chain, will be realized only when these efforts lead to increased export earnings.

Recent data suggest that exports are on the rise. However, India’s share in global exports is still hardly 2%. This is a miniscule given the size of the country. What is the root cause of this dismal performance? An oft-given reason is high logistics costs. To address this problem, policymakers are making efforts to build world class transport infrastructure. However, even as the building of hard infrastructure takes place, emphasis should be given to soft infrastructure as well. Also, upgrading of infrastructure at ports should be taken up simultaneously, as they are the last point from where goods are exported.

The key parameters are: 

• logistics time in hours
• demurrage cost as per cent of logistics cost
• ease of Customs and documentation measured on a scale of 1-10, with one being least hindrance
• cost of Customs clearings as share of total logistics cost
• speed money as per cent of logistics cost
• overall perception of bribes as hindrance to business, measured on a scale of 1-10, with one being least hindrance
• harassment by gangs, pilferage/leakage, etc., measured on a scale of 1-10, with one being least hindrance
• time taken from unloading of cargo to Customs check at storage yard
• time taken from Customs check at storage yard to when goods finally move out of port for importers
• time taken from the cargo transported to port to inspection by Customs officials; and
• time taken from completion of Customs officials’ inspection to cargo loaded on vessel.

Let me share with you some interesting insights from the Logistics Performance Index survey where about 1,200 interviews were conducted with various stakeholders dealing with export consignments at 22 major ports of India to determine their perception of the 11 parameters. A logistics performance index of each port was determined based on the raw rate collated after normalization.

The indexation exercise indicates there are significant differences in efficiency across ports. There is ample scope for several ports to improve their efficiency in handling consignments and catch up with the ports that are performing well. It must be mentioned that the ports in the eastern and the southern regions of the country significantly lag in terms of efficiency compared with those in the western and the northern regions. The sooner these ports address their logistics gaps, the easier it will be for India to become more competitive in the global market.

While exporters should see benefits in terms of logistics cost, the respective port authorities and policymakers should develop a mechanism to create a seamless system with the help of technology and digitization, wherever required, to help the country achieve global export competitiveness.

The scope for process re-engineering should be explored to remove nonvalue adding, yet time consuming, nodes and identify inefficient nodes by understanding the micro-processes involved in the ecosystem. A transparent system defining responsibility and accountability, including decisionmaking for each node involved, needs to be incorporated in the ecosystem by introducing standard operating procedure across all activities.

How is CBIC working towards simplifying the customs process?

Vinod Sharma: The Central Board of Indirect Tax and Customs (CBIC) is focusing on trade facilitation to automate tax compliances with the help of technology and digitization and implemented several reform measures to smoothen trade across borders. In this regard, the CBIC has provided a centralized filing system for transactions related to cross-border trade in the Indian Customs Electronic Gateway (ICEGATE), the national portal of Indian Customs. The ICEGATE has launched various ancillary services for taxpayers for trade facilitation like ‘Compliance Information Portal’, which provides customs compliance requirements of import-export transactions to taxpayers, ‘Single Window Interface for Facilitating Trade’, which allows the facility to lodge custom clearance documents online at a single point, ‘Custom Duty Calculator’, ‘Custodian Registration’ through ICEGATE which will help custodian to maintain Uniqueness with each port mapping, ‘Registration Enquiry’ to users to check whether a particular PAN is registered with ICEGATE or not, ‘GSTN Integration’ to the users where GSTN has not integrated automatically, ‘CTOICEGATE Registration’ to register CTOs at ICEGATE for exchanging required data, ‘Cargo Summary Notification’ Enquiry wherein Authorized Notified Carriers (ANC) – Freight Forwarders, NVOCC, Consolidator would be able to check details related to Cargo/Bill of Lading (BL)/Container.

In another recent update, the Customs department has started a standardized risk-based faceless assessment system across the country for clearance of imported consignments in phases starting with metal. This is aimed at promoting ease of doing business as it would bring uniformity in Customs examination, and reduce the time taken for clearing consignments.

The National Customs Targeting Centre (NCTC) has developed a system that generates centralised examination orders for Bills of Entry (BoE), based on various parameters, and this will be rolled out in phases. This risk-based scrutiny would be meant for 'Second Check Bill of Entry', under which imported goods do not have to mandatorily go through physical examination. Customs officers do assessment of the imported goods on the basis of the documents submitted to the authorities. Risk Management System (RMS)-generated uniform examination order across all Customs stations will be implemented for 'Second Check Bill of Entry' in a phased manner, starting with one group of commodities and will thereafter be extended to all other goods incrementally, by adopting a modular approach. This functionality is expected to enhance the uniformity in examination, and reduce the time taken in the process as well as cut associated costs.

A new web-based system for expedited export consignment clearance is also in the offing. This system will eliminate the need for separate applications required by various regulatory bodies. It will also allow exporters to submit their export declaration documents online at a single point of approval from authorities and will follow the current process for import clearance where export consignments must undergo a physical registration process. The CBIC is reportedly building this new single-window clearance system for exports of goods, in order to incorporate their approvals with the new system. By the end of 2023, the department is expected to meet its target  of having an average release time of 24 hours and 12 hours for exports through seaports and airports, respectively.

According to the report, the new system was created so that the Customs information technology system will automatically identify import items based on risk factors. Moreover, the system will automatically direct sample collection, inspection, delegation to Customs, etc., which in a way, obviates the need for manual instructions.

Your suggestions to the industry stakeholders…

Manu R Bhalla: The warehousing sector stands out to be an active contributor to the Prime Minister’s vision of making India a US$ 5 trillion economy and complements well the PM GatiShakti program. Collaborative and active participation from all stakeholders including Government is fundamental to meet and maintain demands from industry and consumers. The warehousing sector continuous to have facilities without minimum standards that are required for the efficient working of a warehouse. It is imperative that widespread awareness of the benefits of standardisation be done for industry to realise, seek standards and adopt them. Two major causes of concern for the industry players that warrants the immediate attention of the regulatory authorities have been the time and cost for procurement of land for construction of warehouses and obtaining requisite licenses for setting up and operating a warehouse. Both these issues require short-term as well as longterm measures to be remedied. Resolving these constraints alone will significantly boost the warehousing sector.

The time is opportune when the states are in the process of or have already launched a logistics policy in tandem with NLP. The policy focus on the logistics sector merits a deep dive into the warehousing sector and prioritizing the implementation of solutions at Central as well as State level.

Mihir G. Shah: If I look at the policy making side of logistics, it’s not just a Centre subject, states need to equally play an enabling and a crucial role in addressing the pain points that the industry has been facing over the years. Positive perception is very difficult to build, but negative perception can be immediate and significantly higher. Industry needs to take a look at all the aspects and work towards building a formidable approach towards enhancing logistical efficiencies. Objectivity is one of the most important elements that we as an industry should emphasize on.

What’s your wish list to fast forward the Masterplan?

Vinod Sharma: All the Ministries need to work closely which they are, the issues at ground level needs to be addressed and resolved. Some of them include integrating all the PGAs with the ICEGATE, enhancing accountability of all customs officials at ground level, etc. We need to find ways to bring down the dwell time of import and export clearances from 24 hours in case of Air consignment and 72 hours in Sea Consignments to minimum 12 and 24 hours.

Malik Shah: If we envision to reach the target set by PM, then export is going to be major driver. For that to happen, our logistics cost is not comparable to the global standards. To reduce the cost, infrastructure development is the major catalyst. We are skewed towards road transports, whereas in the developed economies, the ratio stands at around 30-35%. They are effectively utilizing waterways and railways to supersede logistics growth, which is where India is lagging. That gives an advantage to these countries in reducing the cost and enhancing the reach and speed of movement. Multimodal transportation should be placed an immense attention.

We need to massively invest in capacity building at major ports. We need to work towards cost competitiveness in logistics. We need to work towards attracting global logistics companies and be able to drive investments. We must move away from the already existing fragmented nature of the industry, which is where consolidation would play a major role. We are hopeful that the wish list will be fulfilled very quickly, and we are all game to partner with the government to realize this dream.

It’s very prominent from the above that logistics cost and turnaround time is going to the major improvement area on this journey. We, as a country, need to address these points to reach to competitive level with the rest of the world: Infrastructure, multimodal Approach, Infrastructure & Facility enhancement. We need to address the cost component at all angles, be it operational cost, which involves fuel cost or the high & cumbersome insurance cost. We also need to address the issue of leakages & pilferages. We need a strong thrust from the government as far as industry policy formulation and implementation is concerned. The government must consider Logistics as an Industry to bring about the dynamic transformation that is needed to reduce the logistics cost. The government needs to look at improving the prevalent road quality & conditions and work towards maintenance for driving efficiency into the road network. As we know that digitalization is driving the change in every industry segment. Logistics service providers need to imbibe and adapt to these new age technological interventions such as Warehouse Automation Systems, GPS-based tracking facilities, to name a few, to drive productivity in logistics & warehousing.

Government has started working with the industry stakeholders on taking feedback to improve LPI Index. It would be better if government takes representatives from the Industry for the execution projects also.

TOWARDS AN INCLUSIVE GROWTH

In his concluding remarks, Mihir G. Shah, asserted, “International Trade forms the backbone of the global economies, spurring investment, job creation, economic growth, and raising standards of living. As Supply chains across the globe inevitably inch towards normalcy, India is expected to take advantage of the increasing trading activity. India's real GDP has well exceeded $3 trillion and has overtaken UK as the 5th largest economy recently. Emphasis on Government of India (GoI) policy initiatives, such as Make in India, Aatmnirbhar Bharat, etc., has made domestic industry grow and fulfil domestic demand, and this will naturally expand into higher export potential. Further, the GOI initiative on the Productivity-Linked (PLI) schemes for select industries, has been well patronised and is already showing gains by way of enhanced manufacturing, which when scaled higher, is likely to become much more efficient. Government of India is also increasing the size of government expenditure relative to GDP and prioritizing public expenditure on education, health, and physical infrastructure to sustain economic growth for scaling new heights of becoming a $5 trillion economy coupled with crossing $2 trillion exports in the next few years. In sum, India appears geared to counter global headwinds and to be well on road to recovery. India’s own focused initiatives are likely to receive a boost from the recovery of the world trade and logistics environment.”

“As supply chain leaders, we are all witness to the transformation that our country is going through ably led by the government. This is the first time that the government is engaging with the industry before formulating a policy. This reflects the government’s intent to develop business-friendly policies.

During our recent interactions with the government machinery, the experience has been highly positive and decisive. In the sense that whatever changes desired by the industry in the policy draft are being given due attention and have been worked upon before launching it for the implementation. As a matter of fact, before the official launch of the National Logistics Policy, the government agencies had been seeking feedback from trade bodies and incorporating those changes in the draft policy,” Manu R Bhalla stated. Commenting on the government’s fast-paced initiatives, he reiterated, “The country is on a threshold of transformation. This transformation has been driven from the top. We have to stop complaining about what the government is not doing. We need to be on the drivers’ seat to contribute to the dovetails of the greater vision of the country. If we stay true to our path and our vision, chances of success are greater.”