Commerce Ministry in talks with World Bank for Logistics Performance Index

NEW DELHI: The World Bank is likely to assist the commerce ministry in preparing Logistics Performance Index (LPI) to rank states with a view to improve domestic as well as international trade.

The LPI ranking would encourage states to work and improve upon their logistics infrastructure. Inadequate infrastructure is impacting the country's trade and investments also.

"We are working for this index. The ministry is in talks with the World Bank for this. We would identify the bottlenecks and suggest ways to improve those," an official said.

During the second meeting of the Council for Trade Development and Promotion in January, the ministry had decided to introduce this index.

The ministry will also hold stakeholders consultations to develop parameters and a reporting mechanism for LPI.

Exporters body FIEO Director General Ajay Sahai said that the logistics cost in India is very high and there is an urgent need to work on this parameter. High logistics costs make exports uncompetitive.

The World Bank is already assisting the ministry in ranking states in terms of ease of doing business.

Indian exporters have time and again demanded drastic cuts in railway freight rates to enhance price competitiveness in the global markets as costs of exports is currently very high in India.

A Commerce Ministry strategy paper released in 2010 had emphasised the need to invest billions in improving infrastructure to boost exports. It had asked the government to invest in modernising roads, ports, railways, airports, power and customs stations.

In India, the container transport mainly happens through roads due to various reasons like high railway freight rates, unreliable scheduling of freight trains and poor last-mile connectivity.

The Commerce Ministry is also in consultations with the ports for timely handling of cargo. Currently, traders have to spend a lot of time in off-loading and on-loading their consignments at ports, impacting the country's trade.