Critical Role of Indian NLP in Strengthening E-Commerce Sector – Industry News

– By Darshan Ghodawat

India’s economic growth trajectory is inextricably linked to its logistics sector, a key engine that drives the country’s trade, commerce and industry. A sound logistics policy is essential to support economic prosperity and global competitiveness. The National Logistics Policy (NLP) aims to address excessive costs and inefficiencies in India’s multimodal and cross-sector logistics sectors. By addressing aspects such as boosting economic growth, generating employment opportunities and reducing logistics costs, the policy has made Indian products more competitive in the global market.

Achieving this vision requires significant investment in world-class digital infrastructure, as well as robust planning and implementation across stakeholders. The logistics vision received a significant boost in 2021 with the launch of the PM GatiShakti National Master Plan (PMGS – NMP), which provides seamless multi-modal connectivity infrastructure to various economic zones. This initiative highlights the role of the logistics sector in facilitating India’s economic growth through efficient transportation of goods across the country and beyond.

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The government has demonstrated a sustained focus on transforming the logistics industry through infrastructure and technology-led reforms, leading to the creation of an integrated logistics ecosystem and an efficient multi-modal logistics infrastructure. As a result, India has advanced from 44th to 38th position out of 139 countries in 2023. To unlock the potential of the sector, continued policy support and increased investment in transport and digital infrastructure development are key.

Logistics is at the heart of the e-commerce industry, and every step of the e-commerce supply chain involves the movement of goods in some form. With digitization and live tracking technology, companies now expect faster time to market, greater efficiency and visibility, while simplifying complex operations in remote locations. E-commerce and logistics companies are increasingly using AI and data analytics, including geofencing and PIN-based customer mapping, to build a supply chain and logistics network that reaches remote areas.

A well-executed e-commerce logistics strategy contributes to smoother operations and a better customer experience. By ensuring that products are readily available, orders are processed efficiently, and deliveries are made on time, companies can foster customer satisfaction and loyalty. Logistics supports the growing e-commerce sector by offering cost-effective solutions across the country. Technology-enabled supply chains are enabling the emergence of new businesses such as D2C brands and omni-channel commerce, expanding the reach of traditional businesses and small sellers.

A seamless logistics process can ultimately lead to increased sales and sustainable growth in the competitive online marketplace. E-commerce relies heavily on logistics, which involves managing goods and services from point of origin to point of consumption. E-commerce orders often involve small packages placed by a variety of customers, many of whom may not be loyal to a particular brand. Additionally, product demand can fluctuate unpredictably, making it difficult to predict shipping needs. To address these challenges, e-commerce companies need to streamline their logistics operations.

Logistics plays a key role in the progress of any country and has a direct impact on the gross value added in the economy. The role of policies in streamlining the fragmented logistics sector, reducing costs and increasing efficiency is crucial as India aims to become a $7 trillion economy by 2030. In today’s hyper-charged digital era, logistics has become the backbone of digital economy delivery. The rapid growth of the e-commerce sector in India, which is expected to touch $120 billion by 2026, depends on an efficient logistics network. A significant challenge that India faces is the high cost of logistics, currently at around 14 per cent of GDP, compared to the global average of 8 per cent. NLP is well-defined to address these challenges by reducing logistics costs, improving the profit margins of businesses and increasing the overall economic growth.

The vision of the National Logistics Policy is to create a seamless, efficient and eco-friendly logistics network. It aims to reduce logistics costs from the current 13-14 per cent of GDP to a level equivalent to the global average of 8 per cent by 2030. Achieving this reduction is crucial to enhance the competitiveness of Indian products in domestic and international markets. Finally, fuelled by a strong government framework and consistent investment in infrastructure and technology, the Indian logistics industry is set for unprecedented expansion and innovation. A strong logistics strategy will be key to achieving this goal as the country moves towards a $5 trillion economy. The logistics industry will be very important in defining India’s future by fuelling its economic engine and improving its global profile.

(Darshan Ghodawat is CEO and Managing Director of AVA Global Logistics LLP.)

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