In the ever-evolving landscape of global trade and commerce, logistics plays a pivotal role in ensuring the seamless movement of goods, connecting markets, and powering economies.
India’s recent ascent in the Logistics Performance Index (LPI) 2023, published by the World Bank, is a testament to the nation’s relentless pursuit of excellence in logistics and supply chain management.
This blog delves into the details of India’s impressive climb in the LPI rankings and the key factors that have propelled it to new heights.
Understanding the Logistics Performance Index (LPI)
The Logistics Performance Index, or LPI, is a comprehensive benchmarking tool developed by the World Bank Group. It serves as a crucial indicator for countries to assess their strengths and weaknesses in trade logistics and identify opportunities for improvement. The LPI evaluates the ease of establishing reliable supply chain connections and the structural factors that enable such connections. To gauge logistics performance, the LPI takes into account six essential parameters:
- Customs performance
- Infrastructure quality
- Ease of arranging shipments
- Logistics services quality
- Consignment tracking and tracing
- Timeliness of shipments
This biennial index provides valuable insights for policymakers, businesses, and industry stakeholders, enabling them to make informed decisions and drive improvements in their logistics ecosystems.
India’s Ascension in LPI: A Remarkable Journey
India’s journey up the LPI ranks has been nothing short of remarkable. In the 2023 edition of the index, India climbed six places to secure the 38th position among 139 countries. This impressive leap is a significant improvement from its 44th position in 2018 and 54th position in 2014. The nation’s commitment to enhancing logistics efficiency is evidently paying off.
Key Factors Behind India’s LPI Improvement
Several factors have contributed to India’s impressive rise in the LPI rankings:
1. Policy Interventions:
- PM Gati Shakti Initiative: Launched in October 2021, this National Master Plan for multimodal connectivity aims to reduce logistics costs and bolster the economy by 2024-25.
- National Logistics Policy (NLP): Introduced in 2022, the NLP focuses on ensuring quick last-mile delivery, addressing transport-related challenges, saving time and money for the manufacturing sector, and enhancing speed in the logistics sector.
2. Infrastructure Enhancements:
- India’s infrastructure score improved significantly, rising from 52nd in 2018 to 47th in 2023. Investments in trade-related soft and hard infrastructure, connecting port gateways to economic centers, have borne fruit.
3. Technology Integration:
- Technology has played a critical role in India’s logistics performance improvements. A supply chain visibility platform, implemented through public-private partnerships, has substantially reduced delays.
- The application of radio frequency identification tags to containers by NICDC Logistics Data Services Limited has enhanced end-to-end tracking of supply chains.
4. Reduced Dwell Time:
- India’s remarkably low dwell time of 2.6 days is a testament to streamlined port operations. Cargo tracking has played a pivotal role in reducing dwell times.
India’s Initiatives in Logistics:
- Multimodal Transportation of Goods Act, 1993: Facilitating efficient movement of goods across various transport modes.
- Multi-Modal Logistics Parks: Development of logistics parks to streamline cargo movement.
- Dedicated Freight Corridor: Building dedicated rail freight corridors for efficient freight transportation.
- Sagarmala Projects: Modernization of ports and port-led connectivity.
- Bharatmala Project: Development of a robust road network across the country.
India’s remarkable rise in the Logistics Performance Index 2023 underscores the nation’s commitment to improving its logistics ecosystem. This progress not only enhances India’s attractiveness for international trade but also solidifies its position as a global logistics hub. As India continues on this path of excellence, it holds the promise of further accelerating economic growth and bolstering its stature on the global stage.