‘India’s logistics cost estimated at 7.97% of GDP in FY24’

New Delhi: India’s logistics cost is estimated at 7.97 per cent of GDP in 2023-24, according to a report by the Department for Promotion of Industry and Internal Trade (DPIIT), prepared by the National Council of Applied Economic Research (NCAER).

The report, Assessment of Logistics Cost in India, was released last week by Commerce and Industry Minister Piyush Goyal. It provides India’s first comprehensive and scientifically derived estimate of logistics costs, addressing long-standing inconsistencies created by external studies that often pegged them at 13–14 per cent of GDP.

NCAER’s analysis also indicates that the pace of growth in logistics costs has slowed in recent years, aided by reforms such as the PM Gati Shakti National Master Plan, dedicated freight corridors, Sagarmala, integrated check posts, and the Unified Logistics Interface Platform.

The report captures costs across multiple transport modes, product categories, and firm sizes, while also detailing freight costs per tonne-kilometre. It highlights the growing role of multimodality in improving efficiency and reducing expenses.

Railways were identified as the most cost-effective freight option, averaging Rs 1.96 per tonne per km, compared to Rs 11.03 for road transport, excluding first- and last-mile charges. Air freight, though fastest, remains the most expensive at Rs 72 per tonne per km, limiting its use to high-value, time-sensitive shipments.

Putting India in perspective, the report noted Indonesia’s logistics costs at 24 per cent of GDP, South Korea’s at about 8 per cent, and China’s at 14.4 per cent in 2023.

The findings are expected to provide policymakers with reliable benchmarks to enhance competitiveness and efficiency in India’s supply chains. Agencies