Logistics Performance Index [Latest India Rankings]

India’s ranking in the World Bank’s Logistics Performance Index 2023 has improved, moving up six places to reach the 38th position among 139 countries. In this article, you can read all about the Logistics Performance Index, and how India’s rank has improved in 2023. This topic is relevant for the IAS exam current affairs and GS III sections.

Logistics Performance Index (LPI)

The Logistics Performance Index (LPI) is an index published by the World Bank that measures the efficiency of the logistics sector of a country. 

• It measures the ease of establishing reliable supply chain connections and the structural factors that make it possible, such as the quality of logistics services, trade- and transport-related infrastructure, and border controls. 
• The LPI is used as a tool for benchmarking the logistics performance of countries against each other.
• The LPI 2023 allows for comparisons across 139 countries. The 2023 LPI for the first time measures the speed of trade with indicators derived from big datasets tracking shipments.

What is India’s Rank in Logistics Performance Index?

India’s rank in 2023 is 38 among 139 countries indicating a jump by six places. This improvement is attributed to India’s investments in soft and hard infrastructure, as well as technology, which have contributed to better port performance. The latest edition, the seventh, was delayed by three years due to disruptions caused by the Covid-19 pandemic.

Image source: Economic Times

Investments in trade-related infrastructure:

• The Indian government’s investment in trade-related soft and hard infrastructure has connected port gateways on both coasts to the economic poles in the hinterland. 
• This investment has improved the country’s infrastructure ranking from 52 to 47.

Improved international shipments:

• India’s rank for international shipments has also improved, moving from 44 in 2018 to 22 in 2023. 
• Additionally, the country has moved up four places in logistics competence and equality, ranking 48.

Modernization and digitalization:

• The report highlights that modernization and digitalization are helping emerging economies like India leapfrog advanced countries. 
• End-to-end supply chain digitization is allowing countries to shorten port delays by up to 70% compared to those in developed countries.

Reduced logistics costs:

• The Indian government’s announcement of the PM Gati Shakti initiative, a National Master Plan for multi-modal connectivity, aims to reduce logistics costs and boost the economy by 2024-25.

Importance of logistics for international trade:

• Logistics is the lifeblood of international trade and a powerful force for economic growth and poverty reduction, according to officials at the World Bank. 
• Policies targeting seaports, airports, and multimodal facilities can help improve reliability.

Reasons for India’s Better Performance in LPI

• Dwell time:
  • Dwell time refers to the duration that vessels actively engage in loading or unloading cargo while present at a port.
  • Dwell time in Indian ports has reached an optimal level of approximately three days, surpassing countries like the UAE, South Africa, the US, and Germany.
• Turnaround time (TRT):
  • It refers to the total time taken for a ship to complete its port visit and return to its intended route. It includes the time spent on various activities and processes related to the ship’s arrival, cargo operations, and departure. 
  • India’s average turnaround time of 0.9 days is among the best globally, outperforming Germany, Singapore, Belgium, the UAE, New Zealand, Malaysia, etc.

What brought these positive changes?

• Infrastructure Upgradation and Investments
  • Large investments have been made in upgrading infrastructure in the ports and shipping sector, leading to improved efficiency and productivity.
  • Reforms, adoption of new technologies, emphasis on public-private partnerships, and commitment to ease of doing business have been key factors in enhancing port operations.
• Increased Capacity and PPP Projects
  • The capacity at 12 major ports in India has increased from 871 million metric tonnes (MMT) in 2015 to 1,617 MMT in 2023.
  • Overall, the total capacity of Indian ports has risen from around 1,560 MMT in 2015 to over 2,600 MMT.
  • The value of operationalization of public-private partnership (PPP) projects in major ports has witnessed nearly a 150% increase, contributing to increased operational efficiencies and handling 54% of total cargo in major ports.
• Focus on Decarbonization and Sustainability
  • The government’s focus on decarbonization and sustainability in the maritime sector has resulted in a 14-fold increase in the use of renewable energy in major ports over the past eight years.
  • The combined renewable energy generated by four major ports now exceeds their total energy needs.
  • The Harit Sagar Green Port guidelines have been introduced to promote safe, efficient, and sustainable ports while implementing sound environmental practices.
• Digitalization and Policy Reforms
  • The National Logistics Portal (Marine) and the Sagar Setu app have been launched, providing a seamless digital platform for stakeholders in the logistics sector.
  • The Centre has undertaken key policy and legislative reforms, including the Major Port Authorities Act, Marine Aids to Navigation Act, and Indian Vessels Act, to enhance autonomy, safety, efficiency, and standardisation in the port sector.

India’s Vision of Maritime Power

• The government’s efforts to develop ports as economic hubs align with India’s ambition to become a global maritime power, as envisioned in the Maritime India Vision 2030.

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