Context

• The Commerce Ministry is considering replacing the Multi-Modal Transportation of Goods Act (MMTG) with a full-fledged national logistics law with a view to promote growth of the sector.

Key Details

• National Logistics Efficiency and Advancement Predictability and Safety Act (NLEAPS) is under consideration and this law tends to define various participants of the logistics space and create a light regulatory ecosystem.
• Multimodal transportation refers to a combination of more than one mode of movement, such as rail, road or sea, for end-to-end delivery of goods.
• The move assumes significance as high logistics cost impacts the competitiveness of domestic goods in the international market.
• Effective implementation of the policy would help provide an impetus to trade, enhance export competitiveness, and improve India’s ranking in the Logistics Performance Index.
• India’s logistics sector is highly fragmented and the government aims to reduce the logistics cost from the present 14% of the Gross Domestic Product to less than 10%.
• The sector is complex, with more than 20 government agencies, 40 partnering agencies, 37 export promotion councils, 500 certifications and 10,000 commodities.

Back to Basics

• The Logistics Performance Index (LPI), developed by the World Bank Group, 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.
• It is the weighted average of the country scores on six key dimensions: efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies, including Customs; quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology); ease of arranging competitively priced shipments; competence and quality of logistics services (e.g., transport operators, customs brokers); ability to track and trace consignments; timeliness of shipments in reaching destination within the scheduled or expected delivery time.
• This measure indicates the relative ease and efficiency with which products can be moved into and inside a country.
• Germany and Singapore are the most efficient and highest ranked LPI countries.
• The Logistics Performance Index is reported by the World Bank in every two years.
• India’s rank fell from 35 in 2016 to 44 in the 2018 ranking.