By Nisschal Jaain
Logistics for MSMEs: The MSME sector in India accounts for one-third of India’s GDP and about 40 per cent of the country’s total exports. The logistics sector, on the other hand, contributes to around 14.4 per cent of the country’s GDP and the overall cost is around 14 per cent of the GDP, whereas BRICS average is 11 per cent. One of the primary reasons that can be attributed to the high costs is the highly unorganised nature of the industry. As India draws closer to the $5 trillion economy, exports will form a certain part of India’s growth. However, the industry faces several logistical challenges as MSMEs in cross-border trade deal with high transportation costs, a dearth of strong trade support, and geographical imbalances in export.
To overcome these challenges, Prime Minister, Narendra Modi, launched an initiative called the Unified Logistics Interface Platform (ULIP), this year. Designed for the logistics sector, the promising initiative was introduced as a part of the National Logistics Policy (NLP). The intent was to make businesses in the logistics sector easier by streamlining the logistics processes, increasing their efficiency, introducing transparency and visibility, and lowering logistics costs and time.
The NLP is an inclusive framework that is aimed at enhancing India’s logistics sector which can execute a seamless movement of goods across the nation. The primary intent behind the framework is to reduce the current logistics costs in India. Additionally, the policy allows Indian businesses, especially MSMEs, to become globally competitive by creating a robust logistics infrastructure that facilitates cross-border trade.
In line with the vision of “PM GatiShakti”, ULIP has been conceptualised with the objective to create a nationwide single window logistics platform for end-to-end visibility, develop a logistics gateway by integrating information available with various government agencies across the value chain, provide visibility for optimal usage of various modes of transportation, provide data which can be utilized by the stakeholders for simplification of complicated processes like compliance, document filing, certifications, and approvals, and offer a platform for data exchange among government and private entities who are directly or indirectly involved in the Indian logistics ecosystem.
Factors affecting the Indian Logistics
We are all aware that India’s logistics sector has been fragmented for quite some time. MSMEs must go through redundant manual processes, heavy documentation, and regular interference from various regulatory authorities, among other challenges. This was followed by the global shipping crisis which led to new challenges such as container shortages, high freight costs, late deliveries, trouble establishing liabilities for in-transit goods, and more. Also, small businesses deal with complex shipping processes and compliance issues including several customs clearances and quality or packaging checks. These businesses also face financial problems often overlooked by traditional lenders like banks. All these factors have affected their involvement in the global supply chain.
How ULIP will benefit all the stakeholders
Since its launch, the ULIP has developed a nationwide, interconnected, and multi-pronged system that has catapulted the Indian logistics industry with unmatched ease, speed, and economic expansion. The industry is responding well to the platform with 13 organisations having signed non-disclosure agreements (NDAs) to obtain data on ULIPs.
According to the Ministry of Commerce and Industry, NDAs are being negotiated with 11 other companies. Today, recognised businesses are contemplating integrating with ULIP to organise complex logistical operations, authenticate vendors’ documentation, and gain visibility into freight movement. Currently, more than 100 APIs are used to integrate 30 systems from 7 ministries, including Ministry of Ports, Shipping and Waterways, Ministry of Civil Aviation, Ministry of Road Transport and Highways, Ministry of Railway, Ministry of Finance and Ministry of Electronics & Information Technology (MeitY); encompassing more than 1,600 data fields for users.
ULIP would have direct and indirect benefits to all the stakeholders of the logistics ecosystem.
- Support for informed decision making and real-time inventory management
- Real-time process and cargo movement monitoring on a single platform
- Identification of cheaper logistics modes
- Support stakeholders for simplification of the tedious documentation process
- Enable various value-added services to end-customers
- Facilitating stakeholders for information-driven pricing strategy, cost & labor optimisation
- Source of information for transport demand identification
- With transparency and visibility, truckers shall be able to reduce empty movement and waiting time, thus reducing the operations and maintenance cost
- Support government as a planning tool for prioritizing and building logistics infrastructure
- Robust information and process structure to improve international competitiveness
- Support inter-ministry / inter-agency collaborations, promoting ease-of-doing-business
- Help in better handshaking between the stakeholders which in turn will encourage optimized utilisation of various modes of transportation available
The ultimate goal of ULIP is to empower industry participants to develop a market to create wealth while removing monopolies and unequal advantages. Other than improving the global logistics indices of India and the logistics cost percentage of GDP, achieving admirable results at the granular and individual levels will have a substantial positive impact on the entire logistics industry of India.
Nisschal Jaain is the Co-founder & CEO of Shypmax. Views expressed are the author’s own.