India’s logistics costs fall to 7.97% of GDP in FY 2023–24: DPIIT

By Admin

26 Sep, 2025

India has achieved a significant milestone in building a more competitive and efficient logistics ecosystem. According to a new report prepared by the National Council of Applied Economic Research (NCAER) for the Department for Promotion of Industry and Internal Trade (DPIIT), the country’s logistics cost was 7.97% of GDP in 2023–24. This figure, released through the “Assessment of Logistics Cost in India” report by Union Commerce and Industry Minister Piyush Goyal, represents the first comprehensive and scientifically derived estimate of logistics costs in India.

A Break from the Past

Historically, India’s logistics costs were often cited at 13–14% of GDP, based on fragmented studies or external estimates. Such figures painted India as a high-cost logistics economy compared to developed nations, where logistics typically account for 7–8% of GDP.

The latest DPIIT-backed assessment brings much-needed clarity. With a robust methodology grounded in detailed data, the NCAER study now positions India’s logistics performance closer to global benchmarks. This recalibration has far-reaching implications for policy formulation, international perception, and business strategies.

Gradual Moderation of Costs

The report notes that logistics costs in India have risen at a slower pace over the last five years, reflecting the impact of large-scale reforms and infrastructure development. Key initiatives driving this moderation include:

• PM Gati Shakti National Master Plan – A digital platform integrating 16 ministries to coordinate infrastructure projects.
  
  

• Dedicated Freight Corridors (DFC) – Shifting bulk cargo from road to rail, reducing transit times and costs.
  
  

• Sagarmala Project – Modernizing ports, improving coastal shipping, and enhancing hinterland connectivity.
  
  

• Integrated Check Posts (ICPs) – Streamlining cross-border trade and reducing delays.
  
  

• Unified Logistics Interface Platform (ULIP) – Enabling real-time data sharing across supply chain stakeholders to eliminate inefficiencies.
  
  

These interventions are reshaping India’s logistics landscape, improving efficiency while lowering costs.

Why Logistics Costs Matter

Logistics costs are critical to economic competitiveness. High costs lead to higher product prices, reduced export competitiveness, and lower margins for businesses. For India, aspiring to become a $5 trillion economy and a global manufacturing hub, reducing logistics costs has been a long-standing priority.

By aligning logistics costs closer to global averages, India strengthens its appeal as a manufacturing and export base. Lower costs also benefit domestic producers and consumers by ensuring faster, more reliable deliveries and eliminating supply chain inefficiencies.

A Scientific Approach

The NCAER-led assessment departs from anecdotal or partial estimates, employing a methodology that factors in both direct and indirect logistics costs across various transport modes and value chains. The 7.97% figure is now a reliable benchmark for policymakers and businesses alike.

Commerce and Industry Minister Piyush Goyal highlighted that India now has a “scientifically derived, evidence-based estimate of logistics costs,” providing guidance for future infrastructure investments and supply chain reforms.

Implications for Policy and Industry

This report is particularly timely as India positions itself in global value chains under initiatives like Make in India and the Production-Linked Incentive (PLI) schemes. Reduced logistics costs enhance export competitiveness, especially for sectors like textiles, pharmaceuticals, automotive, and electronics.

For private sector companies, access to accurate logistics cost data enables better supply chain planning and strategic decision-making, reducing reliance on outdated or inflated estimates.

Looking Ahead

While the findings are encouraging, the government remains committed to further lowering logistics costs. Under the National Logistics Policy (2022), ambitious targets include:

• Expanding multimodal logistics parks (MMLPs) nationwide.
  
  

• Enhancing digital platforms for visibility and predictability in cargo movement.
  
  

• Accelerating completion of Dedicated Freight Corridors.
  
  

• Improving first- and last-mile connectivity to rural and semi-urban production centers.
  
  

A Transformational Shift

The 7.97% logistics cost estimate is more than a statistic it signals structural transformation in India’s supply chain ecosystem. With policy reforms, infrastructure investments, and technology adoption converging, India is on track to establish one of the most efficient logistics networks among emerging economies.

As global manufacturers diversify supply chains away from traditional hubs, India’s competitive logistics solutions will be crucial in capturing a larger share of international trade. The DPIIT report not only marks a measurement milestone but also serves as a roadmap for ongoing reforms, ensuring logistics becomes a driver, rather than a drag, on India’s growth journey.