Useful LEADS report on logistics in states

Last Monday, the commerce ministry released the ‘Logistics Ease Across Different States’ (LEADS) report prepared by a team of logistics and transport professionals of EY-LLP, a multinational consulting firm with the main objective of ranking states and Union Territories on the efficiency of their logistics ecosystem. It lists the various actions taken by each state to improve ease of storage and movement of goods, identifies the shortcomings in physical, regulatory and operational environment in each state and gives suggestions to each state on the way forward.

For representation purposes, the report creates three categories of rankings — first for 21 states, second for northeastern states and Himalayan Union Territories, and third for Union Territories of Delhi and Chandigarh. It also looks at logistics ecosystems in clusters of states, adjacent to each other, for making policy and investment decisions in logistics infrastructure in a coordinated and symbiotic manner.

The report is based on 17 criteria based on perceptions of the stakeholders and four criteria based on objective data, unlike the earlier two reports in 2018 and 2019 that were based on only the feedback received from the stakeholders. It places Gujarat, Haryana, Punjab, Tamil Nadu, and Maharashtra at the top followed by Uttar Pradesh, Odisha, Karnataka, Andhra Pradesh, and Telangana.  Uttar Pradesh, Odisha, Jharkhand, and Chhattisgarh have improved their rankings while Madhya Pradesh, Assam, and Andhra Pradesh have fallen in their rankings.

The report is remarkable because it not only looks at the availability and quality of physical infrastructure but also the availability and quality of services and service providers relating to storage and movement of goods and the overall regulatory and operating environment. Its perception-based parameters include reasonableness of freight rates and terminal services, timeliness of cargo delivery, safety of cargo during transportation and storage, ease of obtaining approvals and efficiency of regulatory services besides other factors.

The report is bound to be of great use to investors, who can take a call on locating their facilities based on the availability and quality of physical infrastructure and services relating to logistics besides the regulatory and operating environment in each State. That should spur the state governments to take necessary steps as recommended in the report with a view to improve their infrastructure, services, regulations and thereby, improve their rankings. A healthy competition can emerge between various states to improve the logistics ecosystem and get better rankings and thus lure the investors to take the decisions on location of manufacturing and other facilities.  

The report says India’s logistics cost is estimated to be about 14 per cent of its GDP and that for most of the developing countries the cost is in the same range. It can help all the stakeholders, including various ministries in the Central and state governments and the private players in various segments of the logistics industry, work together and bring down the logistics costs in the range of 8-10 per cent of GDP in the next few years. That will help Indian producers to be globally competitive.

Apparently, EY-LLP has prepared the report independently, without any interference from the government. The report acknowledges unstinted cooperation from the central and state governments and other stakeholders. The commerce ministry deserves appreciation for getting this study done and sharing it with all the stakeholders in a transparent manner.  

email:tncrajagopalan@gmail.com