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Accurate data is the first step in bringing down logistics costs in India

  • Published
    11th Jan, 2024

Context:

India has long discussed logistics improvements, and now, with precise data on measurement and quantification, the focus on enhancing performance becomes more targeted.

Logistics Performance Improvement

  • LPI Ranking: India's Logistics Performance Index (LPI) ranking has improved from 54 in 2014 to 38 in 2023, signaling advancements in trade logistics.
  • National Logistics Policy: The National Logistics Policy aims to reduce logistics costs to global benchmarks, enhance LPI ranking among the top 25 countries, and establish data-driven decision support mechanisms by 2030.
  • PM Gati Shakti: Launched in 2021, PM Gati Shakti is expected to impact logistics positively, although its effects might not be immediately reflected in the 2023 LPI.

Estimating Logistics Costs

  • Economic Survey 2022-23: Logistics costs in India range from 14-18% of GDP, exceeding the global benchmark of 8%.
  • D&B and CII Reports: Earlier reports varied, estimating costs at 15-16% of consignment value and 14% of GDP, revealing a competitiveness gap.
  • NCAER Report (2023): Precise methodology estimates logistics costs between 7.8% and 8.9% of GDP in 2021-22, indicating a decline over time.

State-level Logistics Performance

  • Perceived vs. Precise Data: Logistics improvement efforts show in LPI, but perceived challenges persist. NCAER's precise estimation method provides a clearer picture of logistics costs in India.
  • LEADS Report (2023): The Logistics Ease Across Different States (LEADS) report categorizes states as achievers, fast movers, or aspirers based on logistics performance.
  • Coastal States: Coastal states like Andhra Pradesh, Gujarat, Karnataka, and Tamil Nadu excel, while Goa, Odisha, and West Bengal lag. West Bengal is urged to formulate a State Logistics Master Plan.
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