Featured Blogs

LEADS Index – What is it and what does it mean for Indian trade?

LEADS Index

In 2021, India’s logistics sector was valued at $160 billion. It was directly responsible for giving livelihood to over 22 million people in the country. The LEADS Index has also proved to be a major milestone in analyzing the logistics ecosystem in the country. In 2022, it is expected to grow at a Compound Annual Growth Rate(CAGR) of 10% and reach a value of $215 million. Fuelled by advances in technology, digital transformation, a gigantic boom in infrastructure and a growing need for environment-friendly solutions, the logistics industry is rapidly evolving.

In such times, different states must take initiatives to make it easy and simple for goods to move around and across the territories. One way to measure the ease of moving goods across different states in India is the LEADS Index.

What is the LEADS Index?

What is the LEADS Index

The states and union territories of India are responsible for bringing about an all-around development of the logistics industry. The LEADS Index was devised by the Ministry of Commerce and Industries (MoCI) to effectively measure the ease of moving goods across different states and UTs and to encourage them to improve the efficiency of the logistics ecosystem. The LEADS Index has brought about constructive competition among the states and union territories.

‘LEADS’ stands for ‘Leads Ease Across Different States’. Various parameters and measures are recorded to calculate the overall LEADS Index for every state and union territory. Data is carefully collected and collated for the MoCI. The LEADS Index model was devised based on the World Bank’s biannual Logistics Performance Index (LPI).

What is the vision behind the LEADS Index?

What is the vision behind the LEADS Index

India is the fifth-largest economy by nominal GDP. It is also one of the fastest-growing economies in the world. For such a rapidly growing economy, efficient logistics is critical. The cost of logistics should be kept low while the ease of logistics should be high to enable the competitiveness of not just the logistics industry but also all the other industries, as every industry depends on logistics in some way.

To provide a greater push to the Atmanirbhar Bharat initiative, the Government has taken steps to improve the logistics ecosystem of India. Infrastructure is being strengthened through initiatives like Sagarmala, Bharatmala, Dedicated Freight Corridors, etc. Regulatory and process reforms are being introduced.

India has a federal structure of governance- the state governments and the central government have to work hand-in-hand. Their collaboration is imperative to make effective changes in the regulatory mechanism, build a strong infrastructure, and improve the ease of logistics while keeping costs in check. The LEADS framework aims to introduce a supply chain mindset across the country. The objective of the framework is to rank the states and union territories on the efficiency of their logistics ecosystem as perceived by the various stakeholders of the logistics industry.

The LEADS framework and study has three primary purposes:

· Rank the states and union territories on the state and ease of their logistics ecosystem

· Collect feedback from the logistics industry stakeholders

· Suggest areas of improvement based on the feedback received and challenges faced by the stakeholders

What are the indicators of the LEADS Index?

What are the indicators of the LEADS Index

The LEADS Index is structured around three key dimensions that play a critical role in logistics ease:

· Infrastructure

· Services

· Operating & regulatory environment

LEADS Index 2018 and 2019 versions were perception-based. LEADS Index 2018 had eight perception-based indicators. In 2019, a new indicator was added to the mix. LEADS Index 2021 used perception-based indicators and integrated objective parameters to calculate the index.

The perception-based indicators used for the LEADS Index 2021 are:

· Quality of road infrastructure

· Quality of rail infrastructure

· Quality of multi-modal terminal infrastructure

· Quality of unimodal terminal infrastructure

· Quality of warehousing infrastructure

· Quality of logistics services

· Capability of logistics service providers

· Reasonableness of road freight rates

· Reasonableness of prices of terminal services

· Timeliness of cargo delivery – transportation

· Timeliness of cargo delivery – terminal services

· Availability of mobile/internet connectivity

· Safety and security during transportation

· Safety and security at terminals

· Extent of facilitation

· Ease of obtaining all approvals

· Efficiency of regulatory services

The objective indicators used for the LEADS Index calculation are:

· Binary questions across institutional, policy, and regulatory & operational factors

· Secondary data sets like the length of highways and roads, number of CFSs, PFTs, ICDs, the capacity of terminals & storage, GSVA, etc.

The 2021 LEADS Index

The 2021 LEADS Index

The 2021 LEADS Index used statistical methodology and objective indicators over and above the perception-based indicators from the previous years. The focus in 2021 was to make the index as objective as possible. The 2021 index remains largely a perception-based index, though it is a good beginning to make the index more objective. The 2021 LEADS Index calculation received 3771 responses from 1405 respondents. After data cleaning, 3363 of these were found valid and used to calculate the 2021 LEADS Index. The respondents were a mix of traders and shippers, transport service providers, terminal infrastructure service providers, and logistics service providers.

In 2021, the states and the union territories were divided into three categories for better representation –

· The 21 states

· The northeastern states and Himalayan union territories

· Union territories

Just like the previous LEADS Indices, in 2021 too, Gujarat scored the highest index, followed by Haryana, and Punjab. Gujarat transport service is considered the most commendable and efficient. Haryana is a newcomer in the top three of the LEADS Index.

Top 3 LEADS Performers

Top 3 LEADS Performers

Gujarat

Gujarat has remained a constant leader when it comes to the LEADS Index. It retains its position as the top performer in 2021 as well. Gujarat transport is known for its proactive policies, well-developed infrastructure and a responsive government that drives the services effectively in the state. The stakeholders are extremely satisfied with the state, the cost and ease of logistics in Gujarat.

However, stakeholders also faced some challenges like road conditions in some areas, unreliable transport towards northern states due to unavailability of engine or power, undue stoppage by RTO for checking, cases of theft, etc. The state actively works to uplift the condition of Gujarat transport.

Haryana

As mentioned before, Haryana is a new entrant among the top 3 of the LEADS Index in 2021. The stakeholders have great confidence in Haryana transport and the state of services and infrastructure in the state. In 2019, Haryana was ranked 6th on the LEADS Index. This is a significant jump for the state – from 6th in 2019 to 2nd in 2021. It held the same rank in 2020, too.

However, stakeholders also faced challenges like road conditions in some areas, very high rail freight charges, frequent stoppage by RTO, cargo safety challenges, etc. Haryana State Transport has formulated a logistics, warehouse, and retail policy to help address the challenges.

Punjab

Punjab stood second in the 2019 LEADS Index. In 2021, it saw a drop in ranking with its 3rd position. Stakeholders seem to have greater confidence in Haryana transport than in Punjab transport. Punjab transport also ranked lower in infrastructure and policy, making it less easy for the logistics industry in Punjab, especially when compared with those in Haryana and Gujarat.

Stakeholders also faced some challenges like lack of testing facilities for required certification in some areas, road conditions in some industrial areas, outdated infrastructure in hubs, lack of connectivity to seaports, unionization raising first and last costs, lack of transparency, significant container availability challenges, frequent thefts, lack of faceless customs clearance leading to unfair trade practices, etc. Punjab Transport is still quite proactive in addressing stakeholder challenges and is actively working to ease the ecosystem.

Conclusion

The logistics industry in India is constantly evolving. Evaluating the logistics ecosystem of the entire country with just one index is quite a challenge but the LEADS Index is a good indicator. In the 2021 LEADS Index, objectivity has also been introduced to make the system more objective and transparent.

Vahak – India’s largest online marketplace for loads and lorries can help ease all your logistics tensions in just a few clicks. Vahak connects you with GST-verified transporters, truck owners, and brokers. This ensures that you don’t need to look into every state and central regulation when you transport your cargo anywhere in the country. It also helps you reduce your calling time by 90%, works to grow your network without a commission fee, and offers a 100% safe, secure, and private bidding process.

Download the Vahak App and try for free today!

Leave a Reply

Premium Crown
closeIcon
Premium Crown
Vahak Premium

Benefits of Using Vahak Premium

Fill Check Verified and Trusted Loads
Fill Check Fully Transparent bidding/negotiation process
Fill Check 24/7 Customer Support
Fill Check Secured and RBI Compliant Payment Gateway
Fill Check E-POD Access & Download
Fill Check Dedicated Key Account Manager
Fill Check Real time Tracking of the Load through SIM Tracking
Fill Check Real time status update by KAM/Driver
Fill Check Cargo Insurance with additional cost of 80% on Actual for first 10 Fulfilment
%d bloggers like this: