India ranks 39 on World goods transportation list

India’s emerging economy may be catapulting it to new highs in international trade, but the country still has miles to go...

India’s emerging economy may be catapulting it to new highs in international trade, but the country still has miles to go before coming into the reckoning as an efficient and competitive logistic performer. A new study released by the World Bank states that India stands at a dismal 39th place, when compared to 150 other countries, on its ability to efficiently transport goods and services to and from the country. Singapore, with its efficient transport infrastructure, tops the ranking.

The study titled Connecting to Compete: Trade Logistics in the Global Economy uses an interactive index called the Logistics Performance Index (LPI) to benchmark the performance of countries across seven different logistics parameters. The index is based on a survey of global freight forwarders and express carriers, who have provided feedback on the logistics friendliness of countries in which they operate and with which they trade.

While India fares poorly in overall rankings, it is nations like Singapore, Netherlands, Germany, Sweden and Austria that predictably occupy the top five slots in that order. These countries command a score of four on a five point scale (five being the best), while India stands at 3.07.

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On individual parameters too, India fares no better. The index ranks India’s transportation and logistic infrastructure at 42nd spot with a corresponding score of just 2.9, with a similar rank accorded to its tracking and tracing systems as well. Domestic logistics costs are also much higher than those witnessed in other top-ranking countries, earning India the 46th position on that parameter.

“India spends $30 billion more, than it should, on logistics due to inefficiencies in the system,” said Bill Smart, managing director at Singapore based Bengal Tiger Lines, a shipping shuttle feeder operator. “At ports, terminal capacity shortages arise from uncompetitive port charges, port-depth limitations and pilot shortages. While many upcoming ports may have the capacity, there is inadequate connectivity by rail and road to them.”

Other issues like high rate of physical inspections at customs’ check posts, leading to delays in custom clearance, also result in India’s poor ranking. The study reveals 25 per cent rate of incidence of physical inspection at Indian check posts, results in an average customs clearance time of 2.4 days. Contrast this with countries like Singapore, South Africa and UK with just 3 per cent physical inspection, where the average customs clearance time amounted to barely under a day.

“Unlike in India, where manual checking and frequent inspections are the norm, one hardly even spots a customs official in countries like Australia,” said an official at DP World Nhava Seva. “Since there is so much physical contact with customs officials, it increases the scope for corruption.” Experts say that it is commonplace for Indian customs officials to value goods differently and there is much scope for ‘haggling’ on duties, leading to poor transparency.

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With such bottlenecks stumping India’s logistics competencies, the LPI suggests that policymakers should look beyond the traditional ‘trade facilitation’ agenda that focuses on road infrastructure and information technology in customs to also reform the logistics service markets and reduce coordination failures, especially those of public agencies active in border control.