India’s LPI score 3.42 in 2016
The World Bank report ranked India as 35th in 2016 as against 54th in 2014, jumping 19 places in the Logistics Performance Index.
According to a World Bank report titled Connecting to Compete: 2016 Trade Logistics in the Global Economy, India’s logistics performance at its key international gateways has improved in the last two years. In the World Bank’s biennial measure of international supply chain efficiency, called Logistics Performance Index (LPI), India’s ranking has jumped from 54 in 2014 to 35 in 2016 among 160 countries. For the third time, Germany has topped in LPI.
The LPI is an interactive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance. The LPI 2016 allows for comparisons across 160 countries. It is based on a worldwide survey of operators on the ground (global freight forwarders and express carriers), providing feedback on the logistics ‘friendliness’ of the countries in which they operate and those with which they trade.
In the 2016 report, India has increased its LPI score to 3.42 compared to 3.08 in 2014. India has improved its ranking by jumping 19 positions compared to 54th rank in 2014 LPI. Improvement in India’s ranking demonstrates union government’s commitment to make business easily available in India.
While Germany tops the 2016 rankings, India is ahead of comparatively advanced economies like Portugal and New Zealand. In 2016, India’s international supply chain efficiency was at 75 per cent of topranked Germany, said the report. This is an improvement over the 66 per cent efficiency when compared to the leader (again Germany) in 2014.
Better performance in logistics will not only boost programmes, such as ‘Make in India’, by enabling India to become part of the global supply chain, it can also help increase trade. In 2015-16, India’s foreign trade shrank by around 15 per cent.
The LPI does not address how easy or difficult it is to move goods to the hinterland. For that, the World Bank has another measure—a domestic LPI that analyses a country’s performance over four factors: infrastructure, services, border procedures, and time, and supply chain reliability.
While not all yardsticks are comparable across countries, there are some which show that India still has some way to go. For instance, only 69 per cent of shipments from India meet the quality criteria, compared to 72 per cent for China and 77 per cent for Kenya. On the other hand, it takes two and three days to clear shipments, without and with inspection, respectively—numbers comparable to China but longer than what it takes in top-ranked Germany.
Better performance in logistics will boost programmes such as ‘Make in India’, by enabling India to become part of the global supply chain
Similarly, India has an average of five forms required for import or export, compared to 4.5 for China and two for Germany. On the other side, the components analysed in the international LPI were chosen based on recent theoretical and empirical research and on the practical experience of logistics professionals involved in international freight forwarding.
The LPI analyses countries across six components: efficiency of customs and border management clearance, quality of trade and transport infrastructure, ease of arranging competitively priced shipments, competence and quality of logistics services, ability to track and trace consignments, and the frequency with which shipments reach consignees within scheduled delivery times. It is computed from the survey responses of about 1,051 logistics industry professionals.