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India's logistics costs have been officially pegged at 7.97% of GDP for 2023-24, marking the first structured estimate under a national framework developed by NCAER. The figure shows steady improvement from 8.84% in 2022-23 and 8.79% in 2021-22, countering earlier inconsistent estimates of 13-14% cited from external sources. The study, guided by the Asian Development Bank, will now be repeated biennially and shared with other nations as a model. Sector-wise, agriculture, mining, and manufacturing costs fell to 9.09%, while mode-wise coastal shipping remained cheapest at INR 1.80 per tonne-km. India has now narrowed its gap with developed economies, moving closer to the government's 6% target.
The Department for Promotion of Industry and Internal Trade (DPIIT) has estimated India's logistics costs at 7.97% of GDP for 2023-24, marking the country's first official calculation based on a structured national framework. The framework was designed by the National Council of Applied Economic Research (NCAER) after consultations with multiple ministries, industry bodies and international institutions. Advertisement
The latest estimates reveal a steady decline over the past three years where costs stood at 8.84% in 2022-23 and 8.79% in 2021-22. Officials clarified that the previously quoted logistics cost of 13-14% of GDP came from external sources and was not consistent. This unreliable figure had caused confusion among investors and policymakers trying to assess the sector's impact on the economy.
Previously, the widely cited logistics cost figure of 13-14%, which was based on external datasets, lacked consistency. This inconsistency led to uncertainty among both investors and policymakers, according to officials.
NCAER had earlier conducted a pilot study in 2023 with guidance from the Asian Development Bank (ADB), which suggested costs in the 7.8%-8.9% range. This led to the decision to set up a more robust framework that will now be used to calculate costs every two years. The government has also indicated that the methodology could be shared with other countries looking to track similar metrics.
When broken down by sector, logistics costs for agriculture, mining and manufacturing stood at 9.09% in 2023-24, compared with 9.52% in 2022-23 and 9.61% in 2021-22.
The report also detailed mode-wise costs. Coastal shipping emerged as the cheapest 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 are estimated to be around 8?9% of GDP in the US, Japan and Korea, while several European economies operate at around 7-8%. With the latest estimate, India has narrowed its gap with developed markets, though industry experts stress that further gains are needed to meet the government's long-term goal of reducing costs to near 6%.
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