Report on Assessment of Logistics Cost in India

Context

The study on assessing the logistics cost in India was released by the Union Minister of Commerce and Industry.

Key Highlights

• Prepared by: The Industry and Commerce Departments.
• Comprehensive Framework: By capturing logistics costs across different transport modes, product categories, and firm sizes, it offers a comprehensive framework.
• Goal: To create a consistent methodology for measuring logistics expenses and comparing them to international standards, as required by the National Logistics Policy (2022).
• Logistics Cost: According to the latest estimates, India’s logistics expenditures account for around 7.97% of the country’s total GDP.
• Prior Estimates: Previously, data on India’s logistical costs were frequently misreported, with widely used numbers of 13–14% of GDP coming from incomplete datasets or outside studies.
  • • Because of this, the estimates were inconsistent, which caused uncertainty among decision-makers and international stakeholders.
• Enhancement: Compared to the rate of growth in non-services production, logistics expenses have been gradually increasing at a slower rate over the last five years, according to estimates.

Major Accomplishments of India’s Logistics Industry

• 2023 Rankings In the Logistics Performance Index (LPI), India came in at number 38 out of 139 countries, which represents a significant gain of six spots from its ranking in 2018.
• In 2024–25, the Inland Waterways Authority of India (IWAI) reported freight traffic of 145.5 million tons.
• Additionally, throughout the same period, the number of operational national waterways rose from 24 to 29.

Issues

• High Logistics Costs: India’s logistics costs are estimated to be around 13–14% of GDP (as previously mentioned), which makes Indian exports less competitive when compared to its rivals worldwide.
• Infrastructural Shortcomings: The industry lacks adequate warehousing, cold storage, and last-mile connections.
• Road Dependency: Because there is an overreliance on road transport, there are traffic jams, delays, and increased transportation expenses.
• Problems with Multimodal Transportation: The low proportion of freight carried by railroads and inland waterways hinders the establishment of a productive multimodal system.
• Environmental Issues: The excessive reliance on diesel-powered trucks increases carbon emissions and contributes to environmental contamination.

Major Government Projects in Logistics

• PM GatiShakti Master Plan: The initiative was introduced in 2021 to bring together various modes of transportation into a cohesive network.
  • • All 36 states and union territories, along with 57 Central Ministries/Departments, have been brought together by it.
• Maritime Amrit Kaal Vision 2047: It is consistent with the tenets of the blue economy and provides a long-term plan for the modernization of India’s maritime industry.
  • • The vision also seeks to establish India as a center for ship construction and maintenance, improve maritime skill development, and encourage coastal tourism.
• Dedicated Freight Corridors: The Ministry of Railways is now constructing two Dedicated Freight Corridors (DFCs).
  • • These specialized railway lines aim to reduce traffic on current passenger routes, cut transportation costs, and increase energy efficiency.
• Multi-Modal Logistics Park: Thirty-five crucial locations have been authorized for the development of MMLPs through initiatives from the private and public sectors. Some of these places are Nagpur, Indore, Chennai, and Bengaluru. Of them, five are expected to be operational by 2027.
  • • The Unified Logistics Interface Platform (ULIP) is a digital platform that combines information from different logistics-related government agencies and ministries into one interface; it has recorded 100 crore API transactions in 2025.
• Gati Shakti Vishwavidyalaya (GSV): India’s first university devoted to teaching transportation and logistics is the GSV.
  • • A crucial component of training competent personnel to help achieve this national objective is the GSV.
• Sustainability: To raise awareness and promote sustainable development, the Freight Greenhouse Gas (GHG) Calculator has been created to compute and compare the overall cost of transportation and GHG emissions.

Source: The PIB

Mains PYQ

(Q) The Gati-Shakti Yojana needs meticulous coordination between the government and the private sector to achieve the goal of connectivity. Discuss. (2022)

Download as PDF