A new report by the Department for Promotion of Industry and Internal Trade (DPIIT) and the National Council of Applied Economic Research (NCAER) estimates that India’s logistics cost was 7.97% of its GDP in the fiscal year 2023-24. This scientifically derived estimate challenges previous external studies that often incorrectly pegged the cost at 13-14% of GDP, which caused confusion among policymakers and global stakeholders. The report also noted that the pace of growth in these costs is gradually slowing.
The decline in logistics costs is attributed to major government reforms and infrastructure projects. Key initiatives like the PM Gati Shakti National Master Plan, Dedicated Freight Corridors, the Sagarmala project, and the Unified Logistics Interface Platform have all contributed to improving efficiency. The report found that railway logistics, at ₹1.96 per tonne per kilometer, are the most cost-effective mode of transport, while road transport and air freight are significantly more expensive at ₹11.03 and ₹72 per tonne per kilometer, respectively.
The report’s findings provide a reliable benchmark for policymakers to enhance competitiveness and efficiency in India’s supply chains. The study also estimated the aggregate logistics cost at ₹24.01 lakh crore at 2023-24 prices. The government considers the new, lower figure a better metric to track logistics costs and make international comparisons.