Unlocking India’s Logistics Potential

Unlocking India’s Logistics Potential

Context:

In a bid to revolutionize India’s logistics landscape, the Department for Promotion of Industry and Internal Trade (DPIIT) recently spearheaded a transformative workshop centered around the Unified Logistics Interface Platform (ULIP).

Relevance:
GS-03 (Economy)

Key highlights:

• ULIP was launched in 2022 as a cornerstone of the ‘National Logistics Policy (NLP).
• It was an initiative geared towards bolstering efficiency and curbing logistics costs within India.
• Its primary objective is to establish a transparent, unified platform offering real-time insights to all stakeholders, thus streamlining operations across the logistics spectrum.
• The workshop underscored the imperative for ULIP to offer comprehensive visibility across multi-modal transport networks. This necessitates seamless integration with existing systems, culminating in the creation of a National Single Window Logistics Portal.
• Such integration ensures that stakeholders benefit from a holistic view of cargo movement, facilitated by real-time monitoring, while safeguarding data integrity through state-of-the-art encryption measures.

It comprises of three foundational components:

• Integration with Ministries’ Data Sources: By interfacing with various ministries’ existing datasets, ULIP ensures a comprehensive pool of information accessible to stakeholders.
• Private Player Data Exchange: Facilitating seamless communication between public and private entities, ULIP promotes collaboration and information sharing across the logistics ecosystem.
• Unified Document Reference: Simplifying the supply chain, ULIP provides a standardized reference point for all pertinent documents, streamlining operations and enhancing efficiency.

What is the Logistics Performance Index (LPI)?

• The LPI stands as an interactive assessment tool devised by the World Bank Group to gauge the ease of establishing dependable supply chain connections and the underlying structural factors enabling such connections.
• It aids nations in recognizing the hurdles and potentials inherent in their trade logistics performance and suggests avenues for enhancement.
• The LPI evaluates logistics performance based on six key parameters:
  • Facilitation of shipment arrangements
  • Quality of infrastructure
  • Customs efficiency
  • Timeliness of shipments
  • Quality of logistics services
  • Capability for consignment tracking and tracing
• Historically, the LPI was published biennially from 2010 to 2018, with an interruption in 2020 due to the Covid-19 pandemic. In 2023, a revamped methodology for the index was introduced.
• The LPI for 2023 facilitates comparisons across 139 countries. It incorporates indicators derived from extensive datasets tracking shipments, marking a new focus on the speed of trade.

• India has shown improvement, rising to the 38th position out of 139 countries in 2023 from its 54th ranking in 2014.

Factors Contributing to India’s Enhanced Performance in LPI Rankings:

• National Logistics Policy 2022: In tandem with the Gati Shakti Initiative, the National Logistics Policy (NLP), launched in 2022, aims to streamline last-mile delivery, tackle transport-related obstacles, cut down time and expenses for the manufacturing sector, and enhance overall efficiency in logistics. Its target is to align logistics costs with global benchmarks and secure a top 25 LPI ranking.
• PM Gati Shakti Initiative: In 2021, the Indian government introduced the PM Gati Shakti initiative, a comprehensive National Master Plan for multimodal connectivity. Its primary aim is to reduce logistics expenses and spur economic growth by the year 2024-25.
• Infrastructure Development and International Trade: India’s infrastructure score experienced a significant uptick, rising five places from 52nd in 2018 to 47th in 2023, according to the LPI report. Investments by the government in both tangible and intangible trade-related infrastructure, linking port gateways on both coasts to major economic hubs inland, have bolstered international trade.
• Role of Technological Advancements in Logistics: Technology has emerged as a linchpin in India’s ongoing endeavors to enhance logistics efficiency. Through a public-private partnership, the government has rolled out a supply chain visibility platform. The implementation of radio frequency identification tags by NICDC Logistics Data Services Limited enables seamless tracking of the supply chain, resulting in significant reductions in delays. The report highlights how emerging economies like India are leveraging modernization and digitalization to leapfrog ahead of developed nations.
• Reduction in Dwell Time: Dwell time, representing the duration a vessel or cargo spends at a specific port or terminal, serves as a barometer of India’s logistics performance improvement. With a remarkably low dwell time of 2.6 days, India outperforms industrialized nations like the US (7 days) and Germany (10 days). Notably, the average dwell time for containers in India and Singapore from May to October 2022 was three days.