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India's logistics performance index reflects some weaknesses in the logistics system.
In the index, which was prepared by the World Bank, India slipped in ranking, said the Union Shipping Minister, Mr G.K. Vasan.
In 2012, India was ranked 46th compared to 39th five years ago.
“We should strive to improve the LPI through a systematic intervention on key issues,” he said at a seminar.
Logistics cost in India is at 13-14 per cent of the gross domestic product compared to 7-8 per cent in developed countries, he said.
The pace, at which infrastructure development has happened, compared to the growth in freight traffic, has been rather slow. This acts as a bottleneck and drags growth.
“We must hasten the pace,” he told in his inaugural address at Logistics Summit 2012 organised by the CII Institute of Logistics.
Mr Vasan said that the government has allowed 100 per cent foreign direct investment in the logistics sector, has eliminated the CST, introduced value-added tax, improved multi-modal transportation and is aggressively promoting public-private-partnerships (PPP). In the current financial year, 42 projects have been identified for capacity addition in ports.
Of this, 29 projects will be on PPP mode. This will enhance the capacity by 244 million tonnes at an estimated cost of Rs 14,500 crore, he said.
The need of the hour is massive investment to build better logistical infrastructure and additional handling capacity, he said.
The industry is also laying focus in making logistics activities leaner and greener by reducing and compensating the carbon footprint they leave on the environment. This should be encouraged.
About 70 per cent of domestic cargo movement in India for the last mile delivery of goods happens through roads.
This leaves more of a carbon footprint.
“We must consider adopting sea routes, which are cost-effective and environment-friendly. On the same lines, inland-water transport is also a focus area, he said.
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