Accurate data is the first step in bringing down logistics costs in India
- In the 2023 Logistics Performance Index (LPI), India is ranked 38 out of 139 countries, showcasing an improvement from its 2014 ranking of 54.
Logistics Performance Index (LPI)
- The World Bank has a Logistics Performance Index (LPI) with a focus on trade logistics.
- This is based on six heads of customs, infrastructure, international shipments, logistics competence, tracking and tracing, and timeliness.
Government Goals for achieving the Vision of the National Logistics Policy
- To reduce logistics costs to global benchmarks
- To improve its LPI ranking among the top 25 countries by 2030
- To establish a data-driven decision support mechanism for efficient logistics
- PM Gati Shakti, launched in 2021, is expected to impact logistics positively in the future.
Logistics Cost Challenges
- Various reports present different estimates of logistics costs in India, ranging from 7.8% to 18% of GDP.
- The Economic Survey 2022-23 notes that logistics costs in India have been in the range of 14-18% of GDP.
- A CII-Arthur D Little report on India’s supply chain (2020) mentions costs of nearly 14% of GDP.
- The NCAER Report (December 2023) presents a more precise methodology, estimating logistics costs between 7.8% and 8.9% of GDP in 2021-22, showcasing a decline over time.
Global Scenario
- Logistics costs amount to 8-10 percent of GDP in the US and Europe, and 9 per cent in China.
- The global average is close to 8 percent of GDP.
- This reveals a competitiveness gap of USD 180 billion for India.
State-Level Logistics Performance
- India's logistics are influenced by states, as highlighted in the LEADS (Logistics Ease Across Different States) report.
- Coastal states such as Andhra Pradesh, Gujarat, Karnataka, and Tamil Nadu perform well, while Goa, Odisha, and West Bengal lag behind.
- The LEADS report suggests the formulation of state-level logistics policies for efficiency improvements.