Gujarat retains pole position in logistics index: Commerce ministry report

Haryana gains four places to come second in 2021, Punjab sheds one to figure in third compared to 2019

Gujarat has maintained its lead over 20 other states by again getting top place on an index to gauge the logistics efficiency across states in 2021 due to its "well-developed infrastructure and services driven by a responsive government", according to a report released by commerce and industry minister Piyush Goyal. It got the No. 1 rank in the 2019 index too.

Even as the state topped in indicators such as availability and quality of infrastructure, extent of facilitation and ease of obtaining all approvals, respondents to the survey that was conducted to construct the index complained that the potholes on road leading to Mundra port gets flooded and leads to congestion during the monsoon season and there is lack of connectivity between ports Mundra and Hazira via a coastal road.

On the other hand, Haryana has gained four places to come second in 2021 compared to the sixth spot in 2019, while Punjab lost one notch to get the third rank from the second two years back, showed the LEADS (logistics ease across different states) index.

The state has secured the 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, the report showed. But, it also suffered from various challenges such as bad condition of the road connecting major industrial areas in Panipat, Karnal, Jind and Rohtak. Besides, rail freight charges are high as compared to road freight charges when transporting rice from Sonipat, Panipat, and Taraori belts.  

Tamil Nadu came fourth in 2021 against fifth position in 2019, while Maharashtra slipped a place to figure in the fifth ranking against fourth released by commerce and industry minister Piyush Goyal.

In the first top five place, the opposition ruled states of Punjab and Maharashtra dropped one place each in 2021 compared to the rankings two year ago, while Tamil Nadu bettered its position.

Punjab'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 ecosystem, according to the report. However, there were issues such as the participating government agencies (PGAs) involved in the certification do not have their testing facilities anywhere near Ludhiana. This results in samples being sent over to Delhi for necessary testing and certification for clearance of exports and imports, adding to the total transaction time.

Maharashtra dropped one place due to worsened road infrastructure and congestion at the port terminals. Poor road connectivity to the gateway port of JNPT leads to time delays and escalated costs for shippers. This high cost of transportation and terminal services is reflected in the low scores obtained by the state in indicators of

reasonableness of road freight rates and terminal services, said the report.

Tamil Nadu proactively introduced policies to support logistics such as granting priority status to logistics and pursuing development of a State Integrated Logistics Plan. State nodal agency has been appointed by the

State for integrated development of the logistics sector. However, the state has low scores for reasonableness of road freight rates and prices of terminal services. Few key factors influencing freight rates are congestion and poor road infrastructure, the report said.

If one looks at top ten positions, Odisha and Tamil Nadu, are the only opposition-ruled states to get a better ranking in 2021 versus 2019. Odisha got seventh place in 2021 against 10th in 2019.

On the other hand, the BJP-ruled Karnataka shed one rank to come at the eighth position in 2021 from seventh in 2019.

Adityanath Yogi-ruled Uttar Pradesh gained seventh place to get sixth position in 2021 from 13th two year ago.

Andhra Pradesh, ruled by the YSR Congress Party, lost six places to come at the ninth position against third in 2019. On the other hand, its erstwhile part-- Telangana-- was down two notches at the tenth place against eighth in 2019.

Among the northeastern states and himalayan union territories, Jammu Kashmir topped the chart. Among the remaining two union territories of Delhi and Chandigarh, the Kejriwal-ruled UT got the top position.

Speaking at the launch of the report, Goyal said the inputs given by the report can lead the way to bring down logistics cost by 5 per cent over the next five years. According to estimates, at present, the cost is about 13-14 per cent of the GDP.

Goyal said that efficient logistics was pivotal to bring ease and empowerment to businesses as well as citizens.

"Rather than just absolute improvement in one state, improvement of logistics across all states will be a force multiplier for the entire logistics ecosystem", he said.

When asked about the issue of container shortage, the minister said now the international trade is picking up "very well" and it augurs well for the Indian economy.

"India alone will be looking at 40 per cent plus growth in our exports and almost a 25 per cent growth in our imports," he said, adding the container problem was happening across the globe and the ministry is working with shipping lines, and container operators.

It is also trying to bring empty containers, customs is trying to speed up the processes, railways is helping to move empty containers at subsidised prices, he added.

With all these efforts, prices have stabilised and now gradually started coming down, Goyal said. "We do hope that in the months to come, we quickly see things stabilizing to normalcy," he added.

The commerce & industry ministry had launched the index in 2018, but there was no such ranking in 2020 due to Covid. In 2021, the overall index, based on a survey conducted during May to August, is based on twenty-one indicators including seventeen perception indicators and four objective indicators. The objective questions include those related to appointment of nodal officer, creation of state logistics cell, creation of state logistics policy,, single window system for approval. The survey got 3,771 responses from 1,405 respondents across the country.