- According to World Bank’s Logistic Performance Index (LPI) 2023, India has climbed six places, now ranking 38th in the 139 countries index, as a result of significant investments in both soft and hard infrastructure as well as technology.
- India’s performance has drastically improved from 2014 when it was ranked 54th on the LPI.
About Logistics Performance Index (LPI)
- The logistics industry comprises all supply chain activities, mainly transportation, inventory management, the flow of information, and customer service.
- Logistics is essential for the economy of a country. It pertains to the general method of controlling how resources are obtained, housed, and delivered to their ultimate location.
- It is a differentiating sector that can largely affect any country’s exports, thereby adding a significant competitive edge, with the underlying assumption of a robust logistics sector.
- It determines the success of not only the country’s supply chain but also influences it on a global scale.
- The logistics industry in India is witnessing rapid growth owing to infrastructure, technology, and the emergence of new types of service providers that are reshaping the sector by reducing logistics costs and providing effective services.
- Moreover, government policies on taxation and regulation play a huge role in the improvisation of the sector.
- The government is going by certain estimates which suggest that logistics cost in India stands at about 13-14 percent of the country’s GDP.
- The Economic Survey 2022-23 pointed out that logistics costs in India have been in the range of 14-18 percent of GDP against the global benchmark of 8 percent.
- Inadequate infrastructure and weak fiscal policies in developing countries such as India result in high transport costs.
- During the lockdown’s most rigid stages, road transportation for large movements of goods was fraught with challenges and difficult to manage.
- Prime Minister Narendra Modi-led government announced the PM Gati Shakti’s initiative, a National Master Plan for multimodal connectivity, in October 2021 to reduce logistics costs and boost the economy by 2024-25.
- In 2022, the Prime Minister launched the National Logistics Policy (NLP) to ensure quick last-mile delivery, end transport-related challenges, save time and money for the manufacturing sector and ensure desired speed in the logistics sector.
- Logistics Master Plan: This initiative takes a geographical strategy as opposed to an industry approach. Several projects and activities will be integrated into the plan to expand the mix of intermodal and/or multimodal transportation. Coordinated construction of relevant infrastructure (gas and utility pipelines, optical fiber cable networks) is accordingly planned.
- National Logistics Law: A national logistics law has been drafted and is under consultation. Through a unified legal framework for the paradigm of One Nation, One Contract, it would support the One Nation, One Market objective and provide a flexible regulatory environment (single bill of lading across modes).
- The law’s provisions will make it possible to assign a distinct logistics account number in place of cumbersome registration processes.
- National Multimodal Facilities and Warehousing: In order to promote intermodal and Multimodal Logistics Parks (MMLPs) as a separate class of infrastructure, the National Grid of Logistics Parks and Terminals is being planned.
- National Logistics Workforce Strategy: For the integrated skill development of professionals in the logistics sector, the government is developing a national logistics workforce strategy.
Suggestions and Way Forward
- The initiatives taken by the government will lead to the progress of the logistics sector.
- The integration in the form of a multi-modal network of transport and warehousing will lead to increased efficiency in the transportation and storage of goods throughout the country.
- There is also a need for better warehousing, cold storage infrastructure and enhanced first and last-mile connectivity to reduce wastage and promote quicker transport of goods from port to port, city to city, and from state to state.
- There is also an opportunity to promote sustainability within this space, by incentivizing players to adopt electric vehicle (EV) infrastructure for commercial purposes to improve last-mile delivery services, while reducing the carbon footprint of the industry.