National logistics index 2021: Gujarat, Haryana and Punjab best performing states

File image of the Delhi-Meerut 14-lane expressway (Image_ NHAI)

Gujarat, Haryana and Punjab are the best performing states in terms of mobility of goods and efficiency of logistics chain, according to the third edition of the government's ranking of states based on logistics infrastructure.

Launched in 2018, the Logistics Ease Across Different States (LEADS) index developed by the Commerce and Industry Ministry and Deloitte ranks states in terms of the logistical support they provided to promote goods trade.

Tamil Nadu and Maharashtra made up the rest of the top-5 states. For representation purposes, states have been ranked in three separate classes including ‘North Eastern States & Himalayan UTs’ and ‘Other UTs’ group. Within this, Jammu and Kashmir has come out as the top ranker followed by Sikkim and Meghalaya.

"Delhi stands at the top rank among other United Territories. Uttar Pradesh, Uttarakhand and Jharkhand have witnessed a remarkable improvement in their ranks compared to 2019 LEADS ranking and have emerged as the top improvers, the report said.

The ranking is based on parameters such as the competitiveness of pricing, timeliness and availability of infrastructure and that of services, among others. It aims to encourage states to provide the policy push towards improving their logistics-related infrastructure.

Gujarat maintained its top position, similar to the previous two rankings. The state has maintained its rank through strong initiatives such as an integrated logistics policy and also a logistics park policy, creation of suitable port-related infrastructure and creation of institutional framework even down to the city level.

Haryana jumped to the second-highest position, up from sixth in the previous ranking. The state has secured highest score for several indicators such as Quality of Warehousing Infrastructure, Timeliness of Cargo Delivery during Transportation, Operating and Regulatory Environment, and Efficiency of Regulatory Services.

Meanwhile, Punjab fell to the third position, from it's earlier second-highest position. The state’s proactive policies such as single window clearance mechanism for regulatory approvals, fiscal incentives under the Industrial and Business Development Policy, grievance redressal mechanism and development of warehousing zones have had an immense impact on the logistic eco-system.

Lower logistics cost eyed

Commerce and Industry Minister Piyush Goyal said that the inputs given by the report can lead the way to bring down logistics cost by 5 percent over the next 5 years, a key focus of the government. According to broad international estimates, the cost of logistics in India is at a high 12-13 percent of GDP.

"Rather than just absolute improvement in one state, improvement of logistics across all states, will be a force multiplier for the entire logistics ecosystem. LEADS 2021 has gone 2-step ahead in analysis of
domestic and EXIM logistics ecosystem of the state," he added.

The minister also suggested that states frame state level logistics policy & logistics master plan, use single-window clearance system for logistics , establishment of grievance redressal mechanism and enabling if skilling in logistics through State skilling infrastructure.

Goyal also said that the speed of highway construction has increased 3 fold from ~12 km/day in 2013-14 to 37 km/day in 2020-21 and that there was a four-fold increase in Railways capex from Rs 54,000 crore in 2013-14 to Rs 2.15 lakh crore in 2021-22.

Methodology updated

The first version of the report, LEADS 2018, focused on export-import trade and assessed the efficiency of the logistics ecosystem in each state and UT.
The second edition of the study – LEADS 2019, covered both international and domestic trade. The latest LEADS 2021 exercise has analyzed domestic and EXIM logistics ecosystem of the state, the government has said.

The latest report has made several improvements in the overall assessment framework. Firstly, objective parameters have been used along with the perception-based indicators for index formulation. A total of 21 perception and objective variables have been statistically analysed to prepare a composite index basis upon which the states have been ranked.

The perception survey was administered to the four different categories of logistics stakeholders, viz. traders/ shippers, transport service providers, terminal operators, and logistics service providers.

The states’ objective survey collected binary responses in the context of the areas related to policy, institutional framework, current enforcement mechanism, warehousing approvals and processes, smart enforcement, city logistics, drivers’ empowerment, etc. to understand the initiatives taken by the different state governments towards improving the logistics environment in their respective states.

The secondary dataset was compiled with the assistance of the central government ministries, department and associated agencies.

The whole exercise garnered 3,771 responses from 1,405 respondents across the country. It was conducted between May to August 2021 in a challenging environment when the COVID crisis was being fought across multiple fronts.