The Department for Promotion of Industry and Internal Trade (DPIIT) has officially estimated India’s logistics costs at 7.97% of GDP for 2023-24, marking the country’s first calculation using a structured national framework. The framework was developed by the National Council of Applied Economic Research (NCAER) after extensive consultations with multiple ministries, industry bodies, and international institutions.
The figures indicate a steady decline over the past three years, with logistics costs at 8.84% in 2022-23 and 8.79% in 2021-22. Officials clarified that earlier widely cited figures of 13-14% of GDP were based on external datasets and lacked consistency, creating confusion among investors and policymakers assessing the sector’s economic impact.
A pilot study conducted by NCAER in 2023, under guidance from the Asian Development Bank (ADB), had suggested logistics costs in the 7.8%-8.9% range, prompting the government to establish a more robust methodology. This framework will now calculate logistics costs every two years, with potential sharing of the methodology with other countries.
Breaking down costs by sector, agriculture, mining, and manufacturing saw logistics expenses at 9.09% of GDP in 2023-24, down from 9.52% in 2022-23 and 9.61% in 2021-22. Mode-wise analysis revealed coastal shipping as the most cost-effective at INR 1.80 per km per tonne, followed by railways at INR 1.96, road transport at INR 3.78, and air cargo at INR 22.
Globally, logistics costs average 8-9% of GDP in the US, Japan, and Korea, while European economies operate around 7-8%. With the latest estimate, India has significantly narrowed its gap with developed markets, although industry experts stress that further improvements are essential to achieve the government’s long-term goal of reducing logistics costs to around 6% of GDP.
