India has seen a significant rise in the World Bank’s Logistic Performance Index (LPI), moving up six positions to now rank 38th in the index that covers 139 countries. This leap marks substantial progress from India’s previous ranking of 44th in 2018 and 54th in 2014.
About LPI
The Logistics Performance Index (LPI) is an innovative benchmarking tool developed by the World Bank Group, designed to assist countries in identifying the challenges and opportunities they face in their performance of trade logistics and suggest ways to enhance their performance. The LPI evaluates the ease of establishing reliable supply chain connections and the structural factors that enable it. The measurement parameters include:
1. Customs performance
2. Infrastructure quality
3. Ease of arranging shipments
4. Quality of logistics services
5. Consignment tracking and tracing
6. Timeliness of shipments
After a hiatus in 2020 due to the COVID-19 pandemic, the LPI was reintroduced in 2023 with a revised methodology. The latest LPI allows for comparison across 139 countries and, for the first time, it measures the speed of trade using indicators drawn from sizeable datasets that track shipments.
Key Factors Driving India’s Improved Logistics Performance
India’s advancement in the LPI can be attributed to several key factors, including policy interventions, infrastructure developments, technological enhancements, and reduced dwell times.
Policy Interventions: PM Gati Shakti and National Logistics Policy
In October 2021, the Indian Government announced the PM Gati Shakti initiative, a comprehensive National Master Plan designed to improve multimodal connectivity, reduce logistics costs, and stimulate economic growth. Furthermore, the National Logistics Policy (NLP) was launched in 2022 to expedite last-mile delivery, eliminate transport-related hindrances, and ensure efficiency in the logistics sector. These policy measures have begun to bear fruit, as seen in India’s ascent in the LPI.
Infrastructure Improvements
India’s infrastructure score has shown marked improvements, with its rank escalating from 52nd in 2018 to 47th in 2023. The government’s investments in trade-related soft and hard infrastructure have bolstered the logistics landscape — notably, linking both coastal port gateways to the country’s major economic centers.
The Role of Technology in Enhancing Logistics Performance
Technology has been paramount in India’s efforts to boost logistics performance. Under a public-private collaboration, a supply chain visibility platform has been implemented, which has drastically shortened delays. Furthermore, NICDC Logistics Data Services Limited applies radio frequency identification tags to containers, offering end-to-end tracking of supply chains. The report also emphasizes that emerging economies like India are surpassing advanced countries through modernization and digitization.
Reduced Dwell Time
Dwell time, referring to the duration a vessel or cargo spends at a particular port or terminal, is a critical factor in logistics performance. India’s low dwell time (averaging 2.6 days) showcases the nation’s improved logistics performance. More impressively, the average container dwell time between May and October 2022 was on par with Singapore, faring much better than industrialized nations such as the US and Germany.
India’s Initiatives Related to Logistics
India’s logistics sector has seen several initiatives in recent years, which include the Multimodal Transportation of Goods Act, 1993; the development of Multi Modal Logistics Parks; the Dedicated Freight Corridor initiative; and infrastructural projects like Sagarmala and Bharatmala.
While India’s rise in the LPI is commendable, it will need to maintain and augment these initiatives to continue enhancing its logistics performance and facilitate inclusive economic growth.