SDG 9: Industry, Innovation, and Infrastructure | SDG 8: Decent Work and Economic Growth
Institutions: Ministry of Commerce & Industry (DPIIT) | National Council of Applied Economic Research (NCAER)
A new, first-of-its-kind study titled Assessment of Logistics Cost in India, conducted by the Department for Promotion of Industry and Internal Trade (DPIIT) in collaboration with the National Council of Applied Economic Research (NCAER), has established India’s logistics cost at 7.97% of GDP. In absolute terms, the total cost is estimated at ₹24.01 lakh crore. This quantification provides a scientifically grounded benchmark for the sector, which is currently undergoing a massive transformation driven by policies like the National Logistics Policy (NLP) and PM GatiShakti.
The sector’s efficiency gain is supported by advanced digital platforms: the Unified Logistics Interface Platform (ULIP) is integrating data across departments, while the Logistics Data Bank (LDB) 2.0 enables real-time visibility of millions of containers. However, the report highlights a critical insight: smaller firms face significantly higher logistics costs, which impedes their ability to scale and compete. To mitigate costs, multimodal transport is emerging as a key lever, with the study emphasizing that improving the first and last 50 kilometers of a journey can substantially lower the total logistics cost.
Policy Relevance
The definitive quantification of the logistics cost provides a precise benchmark essential for measuring the future success of major infrastructure and digital initiatives under PM GatiShakti. The finding that smaller firms face disproportionately high costs necessitates immediate policy action and targeted financial or digital support to ensure the benefits of the NLP are equitable and support the growth of MSMEs, reinforcing the national competitiveness goals.
What is the Logistics Cost as a percentage of GDP?→ The Logistics Cost as a percentage of GDP is a key economic indicator that measures the efficiency of a country’s supply chain and transportation network. It includes all expenses related to warehousing, transportation, inventory management, and processing, divided by the country’s Gross Domestic Product (GDP). A lower percentage indicates a more efficient, less costly supply chain, which directly improves the competitiveness of a nation’s goods in both domestic and export markets.
Relevant Question for Policy Stakeholders: What targeted financial incentives or digital platform subsidies will DPIIT implement to specifically reduce the high logistics costs faced by MSMEs, thus enabling them to compete effectively in national and global markets?
Follow the full news here: From Growth Engine to Global Edge: Supercharging India’s Logistics