New Logistics Policy, A Step in the Right Direction

The New Logistics Policy that was announced on 17 September 2022 has received mixed responses. The policy addresses the lacunae and has taken some measures towards the same. Among its other objectives, it aims to bring down logistics cost to eight per cent by 2030 and thus improve the competitiveness of Indian goods. Speaking at the Entrepreneur Awards & Exhibition 2022 Session, Gautam Kumar, COO & Co-founder FarEye and Mithun Srivatsa, CEO & Co-founder, blowhorn share their views in a session moderated by Saurabh Kumar, Editor, Special Projects, Entrepreneur India.

Entrepreneur India

Agreeing on the positives, says Kumar, “It definitely is an amazing move that will give a much-needed boost to the SMBs, large business houses and to the Indian economy as well.”

Srivatsa adds, “The good thing about the policy is, it lays out a framework for co-ordination between various state departments. The co-ordination was the missing piece and it kind of lays out a framework for many things to come together. Also, it covers drone deliveries, which is exciting and interesting. It is a very optimistic policy.”

On what it means for logistics players, Kumar says, “The policy brings in efficiency, increases facility, enables reaching customers at the right place and leverages technology. This will increase the revenues of the stakeholders in the value chain, bringing down the total cost. Now that we are talking of the organised market, there would be pressure to improve the quality but at the same time you will have access to a lot of buyers and then you can increase your revenue and EBIT.”

Adding his view Srivatsa says, “I think the broad answer is the pie will increase significantly.”

However he rues that, “Bringing logistics cost to the targeted eight per cent is limited by geography. In Germany and the United States, the cost of logistics is 8%-10%. They have very organised inland waterways. The cost of shipping via the inland waterways there is 120^th compared to roads.”

“In India, we are a peninsular country, so coastal shipping should take off in a big way if we have to come from 13% to eight per cent. If the government is able to unlock the potential that is currently constrained by the archaic laws of coastal shipping and focus on river movement, then rail and finally road, together this will help bring us close to our target.”

Sharing his opinion on the way out Srivatsa says, “What can further this growth is if the Indian government also focuses on India Post and leverages the beautiful network and the amazing coverage it has, it would be interesting.”

“Also honestly, I think it will be very difficult because I think the infrastructure has to catch up. “Nevertheless, it is a very good North Star to guide the country in the direction of the target. The policy hopefully will supercharge the DFC too.”

With the Unified Interface Logistics Platform bringing all the digital services related to the transportation sector into a single portal, Kumar says, “This brings the sellers, transporters and buyers and the in-consumer on the same platform. They are getting the right KPIs, right matrices, with the feature of doing physical delivery while having digital touch points and predict delivery and communicate to your in-consumer and buyer.”

He adds, “The biggest benefit for the operator is that of booking empty trucks, that can sell the volume of the empty truck returning to a different location. This will hugely help in cutting cost that comes to 400 billion dollars. This will support 40 million mid-market players to scale up.”

As for technology working for ‘Bharat + delta’ as Kumar calls it, he says, “Technology is the backbone of India. We have a lot of technology capital in India and the government is leveraging the same. From the tech perspective, the only thing you will have to add technology, the infrastructure is ready, people are ready, they are trained, they are using WhatsApp and different applications. The only thing Walmart or Amazon wants is the visibility to communicate better to their customer. So definitely, technology would be one of the biggest levers to optimise the cost. Rather, I will advocate everyone would get higher revenue while you are going to optimise the cost and that’s why the ULIP is a great move from the government.”