Context: Recently, the commerce ministry is considering to replace the multi-modal transportation of goods act with a full fledged national logistics law with a view to promote growth of the sector.
Background

• India’s logistics sector is highly fragmented and the government aims to reduce the logistics cost from the present 14% of the Gross Domestic Product to less than 10%.

Key Points

• The Commerce Ministry is considering replacing the Multi-Modal Transportation of Goods Act (MMTG) with a full-fledged national logistics law with a view to promote growth of the sector.
• Multimodal transportation refers to a combination of more than one mode of movement, such as rail, road or sea, for end-to-end delivery of goods.
• A National Logistics Efficiency and Advancement Predictability and Safety Act (NLEAPS) is under consideration.

Significance of this move

• The new law aims to define what the logistics sector is and its various participants are. The new law aims to create a light regulatory ecosystem.
• The move assumes significance as high logistics cost impacts the competitiveness of domestic goods in the international market. 
• Effective implementation of the policy would help provide an impetus to trade, enhance export competitiveness, and improve India’s ranking in the Logistics Performance Index.

Need for National Logistics Policy:

• There is a need to bring down logistics cost for global competitiveness as India’s logistics sector is highly defragmented and the aim is to reduce the logistics cost from the present 14 per cent of GDP to less than 10 per cent by 2022.
• India’s logistics sector is very complex with more than 20 government agencies, 40 PGAs, 37 export promotion councils, 500 certifications, 10000 commodities, 160 billion market size.
• The logistics sector provides livelihood to more than 22 million people and improving the sector will facilitate a 10 per cent decrease in indirect logistics cost leading to the growth of 5 to 8 per cent in exports
• It is estimated that the worth of the Indian logistics market will be around $215 billion in the next two years compared to about $160 billion at present.

Objective of the policy
The policy which has been formulated by the Commerce and Industry Ministry will aim at-

• Improving India’s trade competitiveness,
• Creating more jobs,
• Improving India’s performance in global rankings,
• Paving the way for India to become a logistics hub.

Steps taken to make the plan robust
The following announcements in Finance Minister’s Budget Speech will make the National Logistics Policy more robust:

• Introduction of GST and e- Way bill system has brought efficiency in the logistics and transportation sector.  It has reduced turnaround time of trucks by over 20%.
• Geo-tagging of all warehousing.
• Warehousing shall be promoted to comply with WDRA norms.
• Village Storage Scheme through Women Self-help groups shall provide backward linkages for seeds thereby reducing logistics costs.
• Cold chains for fish and perishables shall be promoted.
• Refrigerated vans shall be attached to passenger trains to promote movement of perishables quickly.
• Krishi Udan scheme shall be promoted/launched whereby horticulture and perishable commodities shall be transported through the air-route.
• National Organic e-Market will be developed for organic products.
• Accelerated development of highways will be undertaken.
• Delhi – Mumbai and Chennai – Bengaluru express highways to be made operational by 2023.
• The governance structure for the corporatization of one major port shall be introduced.
• 100 more airports shall be established under the UDAN scheme.