Context: Accurate data is the first step in bringing down logistics costs in India. Accurate data is crucial for reducing logistics costs in India for several reasons:

• Improved decision-making: Accurate data enables logistics managers to make informed decisions based on real-time information, leading to more efficient supply chain management and reduced costs
• Optimized routes: By analyzing data, logistics providers can identify the most efficient routes for transportation, reducing fuel consumption and travel time, and ultimately lowering costs
• Inventory management: Accurate data helps in identifying inconsistencies between supply and demand, allowing for better inventory management and reduced carrying costs
• Reduced errors and disruptions: Data analytics can help identify deviations from normal delivery patterns and map supply chains, enabling logistics providers to take preventive measures and minimize disruptions, which can lower costs
• Enhanced customer satisfaction: By ensuring accurate data, logistics providers can better meet customer demands and expectations, leading to improved customer satisfaction and loyalty, which can result in lower costs in the long run

Logistics Performance Index (LPI)

• The Logistics Performance Index (LPI) serves as an interactive benchmarking tool created by the World Bank. Its purpose is to assist countries in recognizing the obstacles and possibilities related to their trade logistics performance, offering insights into areas where improvement is needed and suggesting actions to enhance their overall performance.
• The index focuses on trade logistics and ranks countries based on six criteria: customs, infrastructure, international shipments, logistics competence, tracking and tracing, and timeliness.
• In the 2023 LPI, India is ranked 38 out of 139 countries, showing improvement from its 2014 rank of 54.

Issues in India:

• The Economic Survey 2022-23 notes that logistics costs in India range from 14-18% of GDP, higher than the global benchmark of 8%.
• Various reports, including one by NCAER, highlight variations in estimating logistics costs as a percentage of GDP, with the NCAER report using a precise methodology and estimating a range of 7.8% to 8.9% in 2021-22.
• The Logistics Ease Across Different States (LEADS) report categorizes states into achievers, fast movers, and aspirers, with coastal states like Andhra Pradesh, Gujarat, Karnataka, and Tamil Nadu performing well.
• Some states, like West Bengal, have slipped in logistics performance, and LEADS suggests formulating a State Logistics Master Plan and Policy for efficiency improvements.

Steps taken by India:

• The National Logistics Policy aims to reduce the cost of logistics in India to global benchmarks by 2030, improve LPI ranking to be among the top 25 countries by 2030, and create a data-driven decision support mechanism for an efficient logistics ecosystem.
• The PM Gati Shakti initiative, launched in 2021, is expected to impact logistics performance positively.

• Despite challenges, there is a trend of improvement in India's logistics performance, driven by national and state-level initiatives.