In a significant development, India has successfully reduced its logistics costs to below 9% of the Gross Domestic Product (GDP), primarily attributed to heightened state expenditure on infrastructure, including roads, ports, and digitization, states a report commissioned by the central government. This reduction is anticipated to have a positive impact on both domestic and export-oriented producers, fostering competitiveness.
Rajesh Kumar Singh, Secretary at the Department for Promotion of Industry and Internal Trade (DPIIT), expressed satisfaction, noting that logistics costs are now comparable to those in many Western economies. The government is set to further enhance infrastructure through increased investments from both state and private sectors.
The report titled “Logistics Cost in India,” authored by the National Council of Applied Economic Research, underlines that logistics costs, covering transportation, warehousing, insurance, and administrative charges, have witnessed a decline. This improvement is attributed to advancements in the road network, tax reforms, and the digitization of supply chains.
Logistics costs ranged between 7.8% to 8.9% of GDP in the fiscal year 2021/22, compared to 8.8% to 10% of GDP in 2012/13, as detailed by Poonam Munjal, the lead author of the report.
India’s improved ranking in the World Bank’s Logistics Performance Index is noteworthy, climbing six places to the 38th position out of 139 countries in 2023. The country’s road and port networks’ enhancement and the digitization of supply chains contributed to this advancement.
The report also highlighted India’s efficient average dwell time, measuring the waiting period for truck cargo at a port, which is merely 3 days, as opposed to 7 days in the United States and 10 days in Germany, according to the World Bank.
Prime Minister Narendra Modi’s administration has allocated over 10 trillion rupees ($120 billion) for infrastructure spending in the current fiscal year, representing a one-third increase from the previous fiscal year. Singh stated that the next goal is to elevate India’s global logistics ranking among the top 25 countries.
