Home / Politics / News /  Why India is in a hurry to fix logistics bottlenecks

The government released the annual Logistics Ease Across Different States (LEADS) report for 2021 last week, which ranked Gujarat at the top. Mint explores how an efficient logistic environment can support the economy.

What does the LEADS 2021 report show?

Launched in 2018, the commerce ministry’s survey-based LEADS report ranks states and Union territories (UTs) on the efficiency of their logistics ecosystem, and aims to induce stakeholders to make necessary improvements. Gujarat, Haryana, and Punjab were the top performers in LEADS 2021, while Bihar, Himachal Pradesh, and Assam ranked at the bottom. Within UTs, Delhi secured the first position. Relative to the rankings in LEADS 2019, Uttar Pradesh, Uttarakhand, and Jharkhand have emerged as the top improvers. An efficient supply chain and logistics network are critical to improving competitiveness in all sectors.

What are the parameters?

The survey parameters are based on three key pillars—infra-structure, services, and operating and regulatory environment. The survey, which evaluates prevailing export-import and domestic logistics network, has 21 indicators, including 17 perception indicators and four objective indicators. Quality of rail, road, uni- and multi-modal infrastructure, warehousing infrastructure, quality, and capability of logistics service providers, timeliness of cargo delivery, efficiency of regulatory services etc. are measured under perception-based indicators. Objective indicators assess state or UT’s enabling initiatives.

Is there a global measurement index?

The World Bank’s Logistics Performance Index ranks 160 countries on efficiency of customs clearance; quality of trade and transport infrastructure; ease of arranging competitively priced shipments; compete-nce and quality of logistics services; ability to track and trace consignments. India was ranked 44th in 2018 as against 35th in 2016, and 54th in 2014.

How will efficient logistics help?

Improved supply chain efficiencies will help bring down logistics costs and act as an enabler in enhancing industry competitiveness. India’s logistics cost is approximately 13-14% of its gross domestic product (GDP), while that of developed countries is in the range of 8-10%. With the country aspiring to be a manufacturing destination, an improved logistics environment will benefit production, distribution, and trade activities, and generate better economies of scale, minimizing cost per unit, leading to lower prices for the consumer.

What is the government’s plan?

The Centre’s aim is to bring down logistics costs in India by 4-5% of GDP over the next five years to approximately 8% of GDP. Some of the initiatives undertaken are: On an international level, the Supply Chain Resilience Initiative, and on the domestic front, infrastructure development initiatives such as Sagarmala, Bharatmala, Dedicated Freight Corridors; paperless EXIM trade process through E-Sanchit, mandatory electronic toll collection system (FASTag) etc.

Jagadish Shettigar and Pooja Misra are faculty members at BIMTECH.

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