Logistics Performance Index 2023

• 24 Apr 2023

For Prelims: Logistics Performance Index (LPI), National Logistics Policy (NLP), PM Gati Shakti initiative.

For Mains: PM Gati Shakti, Significance of National Logistics Policy, Significance Investment in infrastructure for Economic Growth

Why in News?

India has climbed six places on the World Bank's Logistic Performance Index (LPI) 2023, now ranking 38^th in the 139 countries index.

• This is a significant improvement from its previous ranking of 44^th in 2018 and 54^th in 2014.
• Earlier, the Ministry of Commerce and Industry released the Logistics Ease Across Different States (LEADS) Report 2022.

What is LPI?

• The LPI is an interactive benchmarking tool developed by the World Bank Group.
  • It helps countries identify the challenges and opportunities they face in their performance of trade logistics and what they can do to improve their performance.
• It measures the ease of establishing reliable supply chain connections and the structural factors that make it possible. The LPI considers 6 parameters to evaluate logistics performance, namely:
  • Customs performance
  • Infrastructure quality
  • Ease of arranging shipments
  • Logistics services quality
  • Consignment tracking and tracing
  • Timeliness of shipments
• The LPI was reported by the World Bank every two years from 2010 to 2018 with a break in 2020 due to the COVID-19 pandemic and a restructuring of the index methodology, eventually came out in 2023.
  • LPI 2023 allows for comparison across 139 countries and for the first time, LPI 2023 measures the speed of trade with indicators derived from big datasets tracking shipments.

What Aspects Led to India's Improved Logistics Performance?

• Policy Interventions:
  • PM Gati Shakti Initiative: In October 2021, government announced the PM Gati Shakti initiative, a National Master Plan for multimodal connectivity.
    • This initiative aims to reduce logistics costs and boost the economy by 2024-25.
  • National Logistics Policy (NLP): The PM launched the National Logistics Policy (NLP) in 2022 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.
  • These policy interventions are fructifying, which can be seen in India's jump in LPI and its other parameters.
• Infrastructure Improvements:
  • According to the LPI report, India's rank moved up five places in the infrastructure score from 52^nd in 2018 to 47^th in 2023.
  • The government has invested in trade-related soft and hard infrastructure, connecting port gateways on both coasts to the major economic centers located in the interior regions of the country.
    • This investment has paid off, with India climbing to the 22^nd spot for international shipments in 2023 from 44^th in 2018.
• Technology's Role:
  • Technology has been a critical component of India's logistics performance improvement efforts.
  • Under a public-private partnership, the government has implemented a supply chain visibility platform, which has contributed to remarkable reductions in delays.
    • NICDC Logistics Data Services Limited applies radio frequency identification tags to containers and offers consignees end-to-end tracking of their supply chain.
  • The report also states that emerging economies like India are leapfrogging advanced countries due to modernization and digitalization.
• Reduced Dwell Time:
  • Dwell time is how long a vessel spends at a specific port or terminal. It may also refer to the amount of time that a container or cargo spends at a port or terminal before being loaded onto a vessel or after being unloaded from a vessel.
    • India's very low dwell time (2.6 days) is one example of how the country has improved its logistics performance.
  • According to the report, the average dwell time for containers between May and October 2022 was 3 days for India and Singapore, much better than in some of the industrialized countries.
    • The dwell time for the U.S. was 7 days and for Germany, it was 10 days.
  • With the introduction of cargo tracking, dwell time in the eastern port of Visakhapatnam fell from 32.4 days in 2015 to 5.3 days in 2019.

What are India’s Initiatives Related to Logistics?

• Multimodal Transportation of Goods Act, 1993.
• Multi Modal Logistics Parks
• Dedicated Freight Corridor
• Sagarmala Projects
• Bharatmala Project

UPSC Civil Services Examination Previous Year Question (PYQ)

Q. “Investment in infrastructure is essential for more rapid and inclusive economic growth.” Discuss in the light of India’s experience. (2021)

Source: TH