Context:
As many as 11 States and two UTs have been named as ‘Achievers’ in the LEADS [Logistics Ease Across Different States] 2023 report released by the Union Ministry of Commerce and Industry (MoC&I).
Relevance:
GS II: Government policies and Interventions
Dimensions of the Aricle:
- Logistics Market in India
- Need for a Holistic Logistics Policy in India
- Government Initiatives to Improve the Logistics Market
- LEADS (Logistics Ease Across Different States)
- Prospects for India’s Logistics Sector: China-Plus-One Strategy Perspective
Logistics Market in India:
- Definition: Logistics involves the efficient planning and execution of the transportation and storage of goods from the origin to the consumption point.
- Objective: The primary goal of logistics is to fulfill customer requirements in a timely and cost-effective manner.
- Market Value: The estimated worth of the Indian logistics market exceeds USD 200 billion.
- Employment Impact: The logistics sector provides livelihoods for more than 22 million people in India.
Need for a Holistic Logistics Policy in India:
- Rationale: The necessity for a national logistics policy arises due to the comparably high logistics costs in India when juxtaposed with other developed economies.
- Competitiveness Enhancement: Reducing logistics costs is crucial for enhancing the competitiveness of Indian goods, both in domestic and export markets.
- Economic Efficiency: Lowering logistics costs contributes to overall economic efficiency, fostering value addition and enterprise across various sectors.
- Encouraging Factors: An effective logistics policy is expected to encourage efficiency, streamline processes, and create a favorable environment for businesses to thrive.
- Strategic Impact: A holistic logistics policy is strategic in bolstering India’s position in the global market, fostering economic growth and trade relations.
Government Initiatives to Improve the Logistics Market:
National Logistics Policy (September 2022):
- Launched by the Indian government to ensure a smooth flow of goods across the country.
- Aims to boost the development of an integrated logistics ecosystem.
- Anticipated outcomes include a reduction in time, wastage, and overall logistics costs.
- Emphasizes sustainability in logistics operations.
PM GATI Shakti Master Plan (2021):
- Introduced to enhance integrated planning and coordinated implementation of infrastructure connectivity projects.
- Establishes a digital platform bringing together 16 Ministries, including Railways and Roadways.
- Focuses on streamlining planning and execution for improved infrastructure development.
Bharat Mala Pariyojana:
- Government approval for the development of 35 New Multi-Modal logistics Parks under Bharat Mala Pariyojana.
- Aims to reduce logistics costs by creating efficient and interconnected logistics hubs.
Air Cargo Terminals for Export Promotion:
- Construction of 40 air cargo terminals to promote export activities.
- Provision of cold-storage facilities in 30 airports to support the storage and transportation of goods with specific temperature requirements.
LEADS (Logistics Ease Across Different States):
- Conceived in 2018 by the Department for Promotion of Industry and Internal Trade (DPIIT), MoC&I.
- Modeled after the Logistics Performance Index (LPI) of the World Bank.
Methodology:
- LEADS incorporates both perception-based surveys and objective data.
- Aims to enhance robustness and comprehensiveness in evaluating logistics performance.
Pillars Evaluated:
LEADS assesses performance across three key pillars:
- Logistics Infrastructure
- Logistics Services
- Operating and Regulatory Environment
Annual Exercise – LEADS 2023:
- The 5th edition of LEADS provides insights into the improvement of logistics performance at the State/Union Territory (UT) level.
- Highlights positive shifts in States’ performance across key pillars.
Significance of LEADS:
- Encourages healthy competition among States/UTs to improve logistics performance.
- 23 States/UTs align their State Logistics Policies with the National Logistics Policy.
- 16 States/UTs grant industry status to logistics.
- Enhances the overall competitiveness of the Indian logistics ecosystem and its global positioning.
India’s Global Ranking:
- India improves its Logistics Performance Index (LPI) rank by 6 places, reaching the 38th position in 2023.
- Digital reforms, including PM GatiShakti, Logistics Data Bank, Unified Logistics Interface Platform (ULIP), and GST, contribute to this advancement.
Collaborative Approach:
- The LEADS report is developed collaboratively and through consultation, bringing objectivity to the assessment of infrastructure development and process-related reforms.
Impact:
- Empowers State/UT Governments with region-specific insights for informed decision-making and comprehensive growth.
- Reflects a positive shift in States’ performance, signaling the effectiveness of various reforms and stakeholders’ perceptions.
Prospects for India’s Logistics Sector: China-Plus-One Strategy Perspective
- Coined in 2013, China-Plus-One is a global business strategy diversifying investments beyond China.
Western Investment Trends in China:
- Over the last 30 years, Western companies heavily invested in China.
- Attracted by low labor and production costs, and the substantial size of the domestic consumer market.
- Resulted in an overconcentration of business interests in China.
Collective Supply Chain Roadmap:
- Economies, including India, unveiled a roadmap to establish collective and resilient supply chains.
- A response to the risks associated with over-reliance on a single market.
- Includes measures to counter supply chain dependencies and vulnerabilities.
Role of India’s Logistics Sector:
- The Logistics sector identified as a cornerstone for India’s growth.
- Aims for tenfold economic expansion from $3.5 trillion to $35 trillion by 2047.
- Critical in facilitating diversified business operations under the China-Plus-One strategy.
-Source: The Hindu
