LEADS: Assessing States’ preparedness in logistics and promoting healthy competition amongst States in this sector

Logistics is not only a critical determinant of trade within the country, but also a determinant of India’s competitiveness in global trade as a whole.

logistics sector
To achieve the above stated goals, the Logistics Division of Ministry of Commerce & Industry (MOCI), Government of India conducts an annual LEADS survey of States/ UTs to assess their preparedness in the logistics sector. (Photo source: Bloomberg)

By Shlok Bharadwaj (IIS)

Logistics is recognized worldwide as a key enabler in fulfilling growth aspirations across all sectors of the economy. As India endeavours to become an ‘AatmNirbhar’ (self-reliant) USD 5-trillion economy by the year 2025, there is an inherent need to develop a robust, well integrated and efficient logistics ecosystem. Logistics is not only a critical determinant of trade within the country, but also a determinant of India’s competitiveness in global trade as a whole.

Recognizing the importance of logistics and the need to reduce logistics cost, a number of structural reforms have been introduced over the last few years to enhance and propel efficiency of the sector manifold. Adhering to above, ‘Logistics Ease Across Different States’ (LEADS) report is developed as a feedback mechanism wherein inputs from States and Union Territories (UTs) are considered on the basis of the drawbacks faced in the logistics sector and suggestions for improvement in this sector. Furthermore, the reforms in the logistics sector cannot reach their true potential without the active participation of States/UTs.

To achieve the above stated goals, the Logistics Division of Ministry of Commerce & Industry (MOCI), Government of India conducts an annual LEADS survey of States/ UTs to assess their preparedness in the logistics sector. The findings for the studies conducted have been presented in the form of reports for the years 2018, 2019 and 2021and the study for the year 2022 is presently underway. With each report, it becomes apparent how the survey for the year builds on the data collected from the previous one, thereby creating a tracker of sorts for measuring the progress of the logistics industry.

The first survey, which took place in 2018, was a perception-based assessment of the logistics industry from the viewpoints of users and other stakeholders across states/ UTs, to understand the ‘enablers and impediments’ to the logistics system in each geographical focus area. The focus area for the study was export-import (EXIM). With the help of data from the study, the Government was able to identify the key impediments to the logistics sector that were not only specific to particular states, but also those that cut across state lines. Most importantly, the study laid the foundation for determining growth in logistics over time by creating a ‘composite indicator’ to measure the performance of the sector. The three major indicators relied upon were infrastructure, processes and regulatory framework applicable to the respective States/ UTs. On the basis of these indicators, the performance of each State/ UT could then be indexed and accordingly ranked. The top 5 performers in the 2018 survey were found to be (in ranking order) – Gujarat, Punjab, Andhra Pradesh, Karnataka, and Maharashtra.

The second survey (conducted in 2019) was also a perception-based assessment. However, in addition to EXIM logistics, the domestic logistics network in the hinterlands and rural areas was also assessed by formulating an index to measure the logistics performance of States on a common platform. This provided an opportunity to build on learnings of different States/ UTs. The top 5 ranking States in LEADS 2019 survey were – Gujarat, Punjab, Andhra Pradesh, Maharashtra and Tamil Nadu.

The third survey, which was conducted in 2021 after a two-year gap (due to the Covid-19 pandemic)went even further in its analysis of the domestic and EXIM logistics ecosystem of the States/UTs.This survey differed from the previous two where it combined perception evaluations with objective-based assessment. Specifically, two improvements were made in the overall assessment framework compared to the previous surveys of 2018 and 2019. Firstly, objective parameters were used along with the perception-based indicators for index formulation. Secondly, the objective parameters were introduced by way of objective survey seeking inputs from States/UTs and by inclusion of secondary datasets on logistics at the State/UT level.Through LEADS 2021 survey, the Centre has managed to onboard States for improving logistics. The survey was based on feedback from States, as well as from private stakeholders to know the issues related to logistics under 3 broad categories – infrastructure, services, and regulatory framework. The data collected is highly useful insofar as it was able to expose the key structural deficiencies in the logistics sector. It is expected that the study shall ultimately help States in taking decisions related to infrastructure development and setting up of processes which will ultimately help in ease of doing business. The top 5 ranking States in LEADS 2021 survey were – Gujarat, Haryana, Punjab, Tamil Nadu and Maharashtra.

After consolidating the findings of the LEADS report and releasing the rankings for the year 2021, the Government reached out to the States/UTs to disseminate the findings of the study so as to enable them to improve and support their logistics ecosystem for the benefit of stakeholders. The report highlighted suggestions at a pan-India level, as well as at the State level. At the national level, the key issues that were highlighted included infrastructure for drivers, adequate parking spaces along highways, mapping of choke points, and improving inter-modal connectivity with National/ State Highways, in addition to ensuring the safety of cargo at terminals and during transportation. States were also advised to formulate a logistics plan for the overall enhancement of the logistics sector. The study also encouraged State and UT Governments to prioritise the development of the logistics sector in their respective domains, with the objective of encouraging positive competition among States. It also nudged Governments to take proactive policy initiatives at the State or UT level in the form of State Logistics Policy/ Plans, and encouraged them to create a repository of data points pertaining to logistics.

As with previous studies in this series, the ongoing study has been built on the foundations of the 2021 report, including a refined framework to engage governmental institutions at all levels and bring greater participation from the States/UTs from the outset. The LEADS 2022 approach takes into account the new initiatives which catalyse development of logistics infrastructure to eventually attain efficiency in the logistics sector and reduction of the logistics cost, such as ‘PM-Gati Shakti’ launched by Prime Minister Narendra Modi on 13 October 2021, as well as current developments in the logistics sector that have been undertaken in the wake of the Covid-19 pandemic. It brings together a cohesive framework, taking inspiration from previous exercises to gauge the effectiveness of States and UTs in enabling and supporting the logistics sector.

LEADS 2022 is being carried out through direct outreach to private stakeholders and Governments of States and Union Territories. The scope of the survey shall be pan-India and is expected to cover all States/UTs. Since the start of the survey in April 2022, as part of the outreach drive, top 40 national associations including FICCI and CII along with more than 50 regional associations have already been approached for their views and comments. Due to their active participation, the survey has been able to garner good feedback and has been successfully on track to achieve nearly 5,000 responses.

Unlike the Logistics Performance Index (LPI) conducted by the World Bank, whose examination is confined to evaluating the EXIM logistics of nations based on perception indicators, the LEADS study considers a mixed set of objective and perception indicators which evaluate the logistics scenario of India on a rational approach with a view to eliminating bias. LEADS is also more useful as an indicator since it also identifies the issues or gaps in the logistics sector on which improvements can be made, as opposed to LPI which confines itself to providing a ranking list with no remedial measures suggested for the benefits of the surveyed countries. For this reason, it is anticipated that LEADS, as a study form, may prove to be more useful in influencing the LPI exercise of ranking States and UTs at a sub-nation level and perhaps also countries at an international level.

(Author is Deputy Director General, Logistics Division, Ministry of Commerce and Industry.  Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited).

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