Wednesday, 09 Oct, 2024
By: Yash Gupte
In 2023, India is on the 38th position with the LPI score of 3.4 out of 5. Image Source: IANS
Apart from the schemes and programmes, in order to ensure efficient and fast paced last mile delivery, end transport-related challenges, save time and finances for the manufacturing sector and ensure desired speed in the logistics sector, the Union Government launched the National Logistics Policy in 2022.
In the 7th edition of the Logistics Performance Index (LPI 2023), India moves up 6 positions to rank 38 out of 139 nations, improving its logistics standing with the World Bank. Since 2015, India has taken a number of steps to increase the effectiveness of its logistics system, under the leadership of Prime Minister Narendra Modi. India's efforts to improve logistics efficiency have been recognised by the World Bank. India has made significant progress on 4 out of 6 LPI indicators as a result of numerous initiatives that have been put in place over the past few years.
The Ministry of Commerce and Industry in a press release said that this is a strong indicator of India’s global positioning, with this development being powered by the government’s laser focus on reforms for improving logistics infrastructure. The PM GatiShakti National Master Plan (PMGS-NMP), a coordinated strategy utilising technology for infrastructure planning and development, was introduced by the Indian government in October 2021. By merging all pertinent data on a National Master Plan and State Master Plans (portals), respectively, PMGS aims to break down silos among various Departments/Ministries in States/UTs. It is a GIS-based application that connects the infrastructure efforts that are already in place and those that have been proposed by several Central Ministries, ensuring first and last-mile connectivity for easy mobility of people and products.
The LPI was developed as an interactive benchmarking tool to assist nations in identifying the opportunities and difficulties they have in their performance on trade logistics and what they can do to enhance their performance. Comparative analysis across 139 nations is possible with the LPI 2023. The 2023 LPI uses indicators obtained from large datasets tracking shipments to measure trade speed for the first time.
Source: Logistics Performance Index, World Bank
India was on the 39th position on the logistics performance index in the year 2007. India’s rank further dropped to 47 in the second logistics performance index of 2010. India’s performance further dropped in the year 2014 as it was ranked at the 54th position on the logistics performance index. The year 2016 was the best year for the country in terms of its performance on the index as it had ranked at the 35th position. The Logistics Performance Index or the LPI considers six parameters to evaluate logistics performance. The six indicators are- i) Customs performance; ii) Infrastructure quality; iii) Ease of arranging shipments; iv) Logistics services quality; v) Consignment tracking and tracing; and vi) Timeliness of shipments. In 2023, India is on the 38th position with the LPI score of 3.4 out of 5. In case of India’s performance on the six different indicators, it scored the highest in timeliness. India’s timeliness score was 3.6 out of 5.0. On the other hand, India’s customs score was the lowest at 3.0. Singapore performed the best and secured the top rank with a LPI score of 4.3, followed by Finland and Germany whereas Libya, Afghanistan and Somalia ranked at the bottom of the index with the scores of 1.9, 1.9 and 2.0 respectively.
Since its introduction in 2007, the LPI has offered a quick evaluation by industry experts of how straightforward it is to export to a target country in terms of the quality of infrastructure, the caliber and accessibility of logistical operations, and public sector bottlenecks. The LPI and its components serve as a snapshot of a country's logistics performance in relation to its peers or comparator countries. As a result, it can be used as a starting point for a more thorough evaluation of a nation's logistics performance.
The above chart shows that there have been ups and downs in India’s performance on the LPI. But in recent years, India has been able to improve its performance and ranking through the sincere efforts taken by the government in providing a boost to the country’s logistical infrastructure.
One of those steps is the launch of the PM GatiShakti scheme in October 2021. It aims to ensure integrated planning and implementation of infrastructure projects in the next four years, with focus on expediting works on the ground, saving costs and creating jobs. The plan aims to increase cargo handling capacity and shorten turnaround times at ports to increase trade in addition to lowering logistical expenses. In addition, it plans to create two new defence corridors, one in Tamil Nadu and the other in Uttar Pradesh, and 11 industrial corridors. Another goal is to extend 4G access to every town. The network of gas pipelines will be expanded by 17,000 kilometers. It plans to bring together 16 Ministries involved in infrastructure. Long-standing difficulties including chaotic planning, a lack of standardisation, difficulty with permissions, and the timely building and use of infrastructure capacities would all be addressed by this. Finance Minister Nirmala Sitharaman in her budget speech of 2022-23 had said that the scope of PM GatiShakti will encompass the seven engines (Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure). Such schemes have significantly contributed in a rise in India’s exports.
Source: Ministry of Commerce and Industry
Apart from the PM GatiShakti, the government of India has also taken several other steps in providing a boost to India’s logistics infrastructure and increase exports from the country. India’s overall exports in the previous financial year 2022-23 have crossed the mark of $770 billion. India’s overall exports (Merchandise and Services combined) in FY 2022-23 (April-March) is estimated to exhibit a positive growth of 13.84 per cent over FY 2021-22 (April-March).
Sagarmala and Bharatmala projects are the two flagship projects of the government aimed at efficient movement of goods and commodities across the country. The development of economic corridors, feeder roads, inter-corridors, national corridor efficiency improvement, logistics park interconnection, coastal and port interconnectivity roads, border and international connectivity roads, among other things, are significant elements of the Bharatmala project. Through a minimum 4-lane highway, the Bharatmala project will link the administrative centres of more than 550 Indian districts. An important goal of the Bharatmala project is to increase freight efficiency on the highways, in addition to developing highways and roads. In addition to the Golden Quadrilateral, North-South, and East-West corridors, the Bharatmala project plans to construct approximately 26000 km of economic corridors, which will bring about over 80 percent of freight traffic on highways.
The Union Cabinet authorised the Sagarmala Programme in 2015 with the goal of developing the port infrastructure holistically along the 7,516 kilometers of coastline through modernisation, mechanisation, and computerisation. The Sagarmala Programme's goal is to lower logistics costs for domestic and EXIM (Export-Import) trade with a minimum investment in infrastructure. By 2025, Sagarmala could increase India's exports of goods to 110 billion USD and add an estimated 10 million new jobs, of which 4 million would be direct jobs. Port modernisation and new port development; port connectivity enhancement; port linked industrialization; coastal community development and coastal shipping and inland waterways transport are the major components of the Sagarmala programme.
The Logistics division of the department of commerce was established on July 7, 2017 and was given the responsibility of the integrated development of the logistics sector. The division is led by the Special Secretary to the Government of India, who has been tasked with developing an action plan to facilitate the overall development of the logistics sector through policy changes, procedure improvements, bottleneck and gap identification, and technology adoption. In total there are 20 government agencies, 37 export promotion councils, 40 Participating Government Agencies (PGA), 500 certifications and 10,000 commodities in India’s logistics industry.
Apart from these schemes and programmes, in order to ensure efficient and fast paced last mile delivery, end transport-related challenges, save time and finances for the manufacturing sector and ensure desired speed in the logistics sector, the Union Government launched the National Logistics Policy in 2022. A national logistics policy was deemed necessary because India has higher logistics costs than other industrialised nations. By 2030, the cost of logistics must be lowered in half from its current level of 14–18 percent of the GDP to the level recommended by international best practices, which is 8 percent. India's current logistics cost is 16 percent of the GDP. The logistics cost-to-GDP ratio is very low in countries like the US, South Korea, Singapore, and several European countries.
India is currently the fifth largest economy in the world and it aims to be in the top 10 in the Logistics Performance Index by 2030. Though meeting this target is not at all an easy task and would require a lot of conviction and dedication, the recent initiatives launched by the government can definitely act as a game changer and can help India in realising its goal by 2030.
