| Introduction: Give a background explanation of India’s performance on the World Bank’s Logistics Performance Index. Body: Summarise the significance of India’s performance on the World Bank’s Logistics Performance Index in 3–4 sentences. Give 2-3 challenges faced by India in logistics performance. Write about steps or what we can do to improve the ranking. Conclusion: Provide a conclusion on the Government of India’s focus on improving the logistics sector and its economic benefits. |
India is now ranked 38th out of 139 nations in the World Bank’s Logistics Performance Index for 2023, a leap of six places from 44th rank in 2018. This has been made due to progress made in ensuring quick last-mile delivery, ending transport-related challenges, and ensuring desired speed in the logistics sector.
Contents
What is the significance of India’s performance?
- Lowering the Cost of Doing Business: It will help lower the cost of doing business in India and would turn India into a preferred investment destination.
- Boosting Exports and Competitiveness: It will help increase India’s exports in the international market and make them competitive.
- Outperforming ASEAN Neighbors: India’s score is better than its ASEAN neighbours like Vietnam, Philippines, and Indonesia which would lead to increased competitiveness related to manufacturing and government programs like Make in India.
What are the challenges associated with it?
- Competition from China, Malaysia, and Thailand: India faces tough competition from China (19th), Malaysia (26th), and Thailand (34th).
- Reducing the Cost of Doing Business: India needs to further reduce the cost of doing business in India.
- Competition from ASEAN in Various Factors: India faces stiff competition from ASEAN in various factors like timeliness, customs, trade, and transport-related infrastructure.
Way forward:
- Cooperation with Singapore for Efficient Customs System: India could cooperate with Singapore and get technical assistance from its efficient custom system which is one of the best in the world.
- Focus on Reducing Fuel Costs: India must focus on reducing its cost of fuel which is very high compared to ASEAN.
- Providing Affordable Electricity to Manufacturers: India must try to provide cheap electricity to the manufacturers thereby reducing the cost of doing business.
- Reviewing Railway Freight Rates: The cross-subsidy policy of railways which leads to freight rates being very high compared to passenger fares makes Indian goods less competitive. Indian freight rates are among the highest in the world which requires urgent review.
- Implementing Tracking Technologies: Technologies like radio frequency identification tags applied on containers let consignees end-to-end tracking of their supply chain.
- Utilizing PM Gati Shakti Initiative: Lastly schemes like PM Gati Shakti Initiative, a National Master Plan for multimodal connectivity aims to reduce logistics cost and boost the economy by 2024-25.
Conclusion:
The Government of India is keenly focused to improve the logistics sector and reduce the cost of doing business in India and help India make a manufacturing and trading hub with sustainable growth and achieve the target of becoming a $5 Trillion economy by 2025.
