There is an urgent need to make global supply chains more resilient to endure another ‘black swan’ event like the Covid-19 pandemic.
The global supply chain dynamics was badly disrupted in the last two years of the pandemic and recently by the geopolitical shocks of the Ukrainian crisis. Further, the rise of MSMEs and start-ups has added a new dimension to what once was ‘a multinational enterprise-specific supply chain’ which is now a ‘sector specific supply chain’.
In India many MSMEs and start-ups source from across the country. However, when the pandemic hit, the lack of modal mixes of transportation became a significant issue. The traditional reliance on road transportation proved costly when drivers were not available, leaving imports in gateway docks with no other modes of connected transportation.
So the international imperative now is to diversify the supply chains across countries and companies.
Inflation in food and medicine has sparked unrest and tensions world over. Ideas over identifying affordable, resilient, and sustainable supply chains soon started being discussed in regional forums such as the QUAD, G10, and even multilateral forums such as Unctad as soon as the pandemic began to recede.
During the pandemic, the resilience of supply chains was stressed as they were on the verge of collapse. But, today, though there is a softening of prices, and a relative redundancy in the logistics component of the supply chain, there is still a worry among the shipping lines for sustaining operations and resilience in the logistics domain in the long term.
In fact, resilience is necessary not only for these components but also for the logistics sector as a whole supplementing the global supply. Especially at a time when the world is just coming out of the pandemic’s impact, there is a need to think about various strategies to bring about resilience in GSC, GVC and the logistics continuum.
The National Logistics Policy is an agenda to transform India’s logistics landscape by 2024. Launched on September 17, the policy received widespread appreciation, both at home and abroad.
The policy comes at a time when the country is already seeing big changes in infrastructure planning. The PM GatiShakti National Master Plan has been transformative. By adopting a ‘whole of the government approach’ more than 1,400 connectivity projects have been planned which include 2,00,000 km of National Highways, more than 65 ports, three National Waterways, over 100 airports and helipads and increasing the capacity of the rail network in the next few years.
The National Logistics Policy adopts a similar approach. Known as the Comprehensive Logistics Action Plan, the proposals include efficiency drivers such as digitisation for enhancing human resource development. The policy dedicates specific chapters to creating an efficient EXIM Logistics landscape. It takes note of the need to build hinterland logistics infrastructure, strategic trade corridors, create a pool of knowledgeable and skilled experts, and promote the use of new-age technologies for creating greater efficiency.
What makes this NMP-NLP complementarity interesting is how various other ongoing initiatives will receive a greater boost. For instance, the government’s One District, One Product (ODOP) and District as Export Hubs (DEH) schemes have been a significant effort towards building regional value chains across districts. The ODOPs and DEH’s primary focus has been on identifying, branding, and promoting products from each district for exporters through district-level management and production. While the PM GatiShakti NMP can provide the infrastructure for these districts, the NLP can handhold the exporters from district in developing their regional supply chains.
The introduction of new age technologies such as AI, Blockchain, Machine Learning, along with creation of a pool of skilled and knowledgeable workforce through the policy will enhance resilience.
PM GatiShakti and rhe National Logistics Policy together have the potential to not only bring resilience to the global supply chain dynamics that India can be connected to but also make the supply chain more standardised, predictable, and cost-efficient.
The combination will enable synergies between human resource and technology and increase the efficiency of logistics. Such a complementarity between the two will also de-risk global investments in setting up manufacturing bases within the country thus helping India leverage the China+ 1 strategy.
And, as it takes over the presidency of G20, opportunities open up for India to lead by example in bringing about the desired resilience through transformative policy interventions and state-of-the-art technology.
The writer is Joint Secretary, Logistics Division, DPIIT, Ministry of Commerce and Industry