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Logistics Ease Across Different States 2023 Report

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:

  1. Logistics Market in India
  2. Need for a Holistic Logistics Policy in India
  3. Government Initiatives to Improve the Logistics Market
  4. LEADS (Logistics Ease Across Different States)
  5. 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


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