Logistics cost ranges from 7.8% to 8.9% of GDP during 2022

New Delhi: The logistics cost in India ranged from 7.8 per cent to 8.9 per cent of GDP in 2021-22, according to quick estimates of economic think-tank National Council of Applied Economic Research (NCAER).

Releasing the report on the logistics cost, Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Rajesh Kumar Singh said that the government has released a national logistics policy to reduce the cost and enhance competitiveness of Indian industry. The department is also working to improve India’s ranking in World Bank’s Logistics Performance Index (LPI) from 38th at present to below 25.

“The kind of investment that India is making in both physical and digital infrastructure....all that is creating an enabling environment where we will start getting good and credible data, on the basis of which, we can do data-based planning and ultimately data based policy making as well,” Singh said. He added that through the report, a framework is being developed which will be used to calculate credible logistics cost estimates. Singh said that the figures are calculated by NCAER on behalf of the government.

NCAER Professor Poonam Munjal said that these are quick estimates and going forward, by use of more granular data, these numbers will be refined further. “These are ballpark numbers... and we prefer to keep them in ranges,” she said. At present, the government is going by certain estimates, suggesting India’s logistics cost stands at about 13-14 per cent of the country’s GDP (gross domestic product). Globally, there are different methodologies to calculate logistics costs at a macroeconomy level.

Capturing origin-destination (O-D) pair-wise, commodity-wise, geography-wise data is critical for accurate estimations. However, the current available non-official estimates of logistics costs (8 per cent to 13 per cent of the GDP) lack a conclusive and scientific calculation framework. To align India’s logistics costs with global benchmarks by 2030, a need was felt to develop a scientific logistics cost calculation framework.