Gujarat tops new logistics index that flags inefficiency of states

Gujarat tops new logistics index that flags inefficiency of states
Gujarat topped the Logistics Ease Across Different States (LEADS) index, Punjab and Andhra Pradesh took the second and third positions, respectively
The logistics performance of Indian states and Union territories is “sub-par” owing to a host of inefficiencies, according to a study which also suggests measures for improvement.

The Logistics Ease Across Different States (LEADS) index, a composite indicator to assess international trade logistics across states and Union territories, is based on a stakeholders’ survey conducted by Deloitte for the ministry of commerce and industry. While Gujarat topped the first-of-its-kind index, Punjab and Andhra Pradesh took the second and third positions, respectively.

Logistics, or the management of the flow of resources such as cargo, documents, information and funds through a range of activities and services between points of origin and destination, is a key parameter in deciding the trade competitiveness of a state or country.

In a major push to developing an integrated logistics framework in the country, including industrial parks, cold chains and warehousing facilities, the government in November granted infrastructure status to the logistics sector, enabling the industry to access cheaper finances. The government also created the position of a special secretary in the commerce ministry to exclusively handle logistics and appointed former director general of the Directorate General of Supplies and Disposals, Binoy Kumar, to the post.

LEADS is loosely based on the World Bank’s biannual Logistics Performance Index (LPI), on which India was ranked 35 among 160 countries in 2016, up from 54 in 2014. LEADS is based on eight parameters such as infrastructure, services, timeliness, track and trace, competitiveness of pricing, safety of cargo, operating environment and regulatory process. The study is based on a perception-based survey of 2,885 respondents across the country over a six-week period.

The study found that supply chain efficiencies and economies of scale are yet to be unlocked, mostly due to suboptimal investment in building scale in infrastructure, automation, human capital and technology. It highlighted problems such as inadequate terminal capacity, poor last-mile terminal connectivity and issues in regulatory services provided by government agencies, among others. It also underlined issues specific to certain states. For example, respondents reported that labour unions created impediments for trade efficiency in states like West Bengal, Kerala, Maharashtra and Himachal Pradesh.

The study identified indicative focus areas such as enhancing capacity, developing integrated and balanced multimodal logistics and transport infrastructure, focussing on standardization, developing regulatory infrastructure, modernizing logistics infrastructure and transport fleet,

Commerce and industry minister Suresh Prabhu said Indian logistics costs are said to be among the highest in the world—in the vicinity of 13% of gross domestic product (GDP). “Germany’s costs in comparison average just above 8% of its GDP, providing its industry a huge competitive edge in the global market,” he added.

After the third meeting of the Council for Trade Development and Promotion on Monday that includes state industry ministers, Prabhu said his ministry will develop a strategy with the policy think tank NITI Aayog for supporting states that encourage exports. India’s merchandise exports increased 13% to $271 billion during the January-November 2017 period while its services exports rose 4% to $135 billion during the same period.

The managing director of a logistics firm, who did not wish to be named, said the study should be used by states to put their house in order. The point-based index clearly shows the areas that states need to work upon, he said. Performance improvements by states on the logistics index would help them attract industries, the person said

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