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There is an urgent need to make global supply chains more resilient to withstand another “black swan” event, such as the Covid-19 pandemic.
Global supply chain dynamics have been severely disrupted in the past two years by the pandemic and more recently by the geopolitical shocks of the Ukraine crisis. Further, the rise of MSMEs and start-ups has added a new dimension to what was once a “MNC-specific supply chain” that is now a “sector-specific supply chain”.
In India, many MSMEs and start-ups come from all over the country. However, when the pandemic hit, the lack of modal combinations of transportation became a significant problem. Traditional reliance on road transport proved costly when drivers were not available, leaving imports at ports without other means of connected transport.
So the international imperative now is to diversify supply chains across countries and companies.
Inflation in food and medicine has caused unrest and tension around the world. Ideas to identify affordable, resilient and sustainable supply chains soon began to be discussed in regional forums such as KUAD, G10 and even in multilateral forums such as Unctad as soon as the pandemic began to recede.
During the pandemic, the resilience of supply chains was highlighted as they were on the brink of collapse. But today, while there is softening of prices and relative redundancy in the logistics component of the supply chain, there is still concern among shipping lines about sustaining operations and resilience in the logistics domain over the long term.
Logistics continuum
In fact, resilience is necessary not only for these components but also for the logistics sector as a whole that complements the global supply. Especially at a time when the world is still emerging from the impact of the pandemic, there is a need to think about different strategies to achieve resilience in the GSC, GVC and logistics continuum.
The National Logistics Policy is a plan to transform India’s logistics landscape by 2024. Launched on September 17, the policy has been widely appreciated, both at home and abroad.
This policy comes at a time when the country is already experiencing major changes in infrastructure planning. The Prime Minister’s National Master Plan GatiShakti was transformative. Adopting a “whole of government approach”, more than 1,400 connectivity projects are planned, including 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 railway network over 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 digitization to enhance human resource development. The policy devotes special chapters to the creation of an efficient EXIM logistics landscape. It notes the need to build logistics infrastructure in the hinterland, strategic trade corridors, create a pool of experts with knowledge and skills and promote the use of new age technologies to create greater efficiency.
Growing complementarity
What makes this NMP-NLP complementarity interesting is how various other ongoing initiatives will get a bigger boost. For example, the government’s One District One Product (ODOP) and District as Export Hubs (DEH) schemes represent a significant effort towards building district-wide regional value chains. The primary focus of ODOP and DEH was to identify, brand and promote products from each district to exporters through district-level management and production. While PM GatiShakti NMP can provide infrastructure for these districts, NLP can keep exporters from the districts developing their regional supply chains.
The introduction of new age technologies such as AI, Blockchain, Machine Learning along with creating a pool of skilled and educated workforce through policy will increase resilience.
PM GatiShakti and rhe National Logistics Policy together have the potential to not only bring resilience to global supply chain dynamics that India can relate to, but also make the supply chain more standardized, predictable and cost effective.
The combination will enable synergy between human resources and technology and increase logistics efficiency. Such complementarity between the two will also reduce the risk of global investment in establishing manufacturing bases within the country, helping India capitalize on the China+1 strategy.
And, as it assumes the chairmanship of the G20, opportunities are opening for India to lead by example in achieving the desired resilience through transformative policy interventions and cutting-edge technology.
The writer is Joint Secretary, Logistics Division, DPIIT, Ministry of Trade and Industry
Published on December 1, 2022
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