Accurate data is the first step in bringing down logistics costs in India

News Excerpt:

Logistics has been talked about for a long time, and India has also focused on improving performance. We are now getting some precise data on measurement and quantification.

India’s performance in the Logistics Performance Index (LPI): 

  • LPI focuses on trade logistics. 
  • This is based on six heads of customs, infrastructure, international shipments, logistics competence, tracking and tracing, and timeliness.
  • In the 2023 LPI, India is ranked 38 out of 139 countries. In 2014, India was ranked 54.
  • India’s logistics performance has improved.
  • The goal has been clearly articulated in 2022: Targets for achieving the vision of the National Logistics Policy are to -
    • Reduce the cost of logistics in India to be comparable to global benchmarks by 2030; 
    • Improve the Logistics Performance Index ranking - endeavour is to be among the top 25 countries by 2030;
    • Create data-driven decision support mechanism for an efficient logistics ecosystem.”

Logistics cost in India:

  • As per Economic Survey 2022-23, logistics costs in India have been in the range of 14-18% of GDP against the global benchmark of 8 per cent.
  • In 2018, a port logistics report by Dun and Bradstreet (D&B) found that the cost of doing business at seaports was around 15-16 per cent of the consignment value. 
  • As per CII-Arthur D Little report, 2020 on India’s supply chain - logistics costs in the Indian supply chain amount to almost USD 400 billion, or 14% of GDP.
  • The logistics cost is 8-10% of GDP in the US and Europe and 9% in China. 
  • The global average is nearly 8% of GDP, revealing a competitiveness gap of USD 180 billion for India. 
  • Other South-Asian countries, such as Thailand and Vietnam, have high logistics costs of 14 and 16-17 percent of GDP, respectively.

National Council of Applied Economic Research (NCAER) report 2023 on logistics cost in India:

  • This is precise in its methodology and estimation. 
  • In the context of India, there are no official estimates for logistics costs as a percentage of GDP. 
    • However, for private sector and academic institutions, India has high logistics costs.
  • NCAER cites three - Armstrong and Associates (2017), an estimate of 13% of GDP; CII (2015), an estimate of 10.9% of GVA; and NCAER (2019), an estimate of 8.9% of GVA. 
    • Clearly, there are variations in what is being measured and how
    • This new NCAER report uses supply and use tables
  • In 2021-22, logistics costs had an estimated range of between 7.8 and 8.9%. 
    • In 2014-15, they had an estimated range of 8.3% and 9.4%. 
    • There has been a decline over time (with a transient increase in 2017-18 and 2018-19). 
    • Two points emerge
      • First, logistics costs aren’t as bad as they are often made out to be,
      • Second, they have declined over time (also evident from LPI).

State-wise logistics cost performance:

  • According to the Commerce Ministry’s LEADS (Logistics Ease Across Different States) report, 2023 - 
    • States are divided into four groups - coastal, landlocked, north-east and UTs.
    • States that do well are called achievers. 
    • States that are middling are called fast movers. 
    • States that are sub-par are called aspirers. 
  • Performance of coastal states:
    • 75% of export cargo is estimated to originate from them. 
    • Among coastal states, Andhra Pradesh, Gujarat, Karnataka and Tamil Nadu are doing well. 
    • The ones that lag are Goa, Odisha and West Bengal. 
    • Most states, including Goa and Odisha, have a state-level logistics policy. West Bengal, bottom of the pecking order in the coastal category, doesn’t have one.


While logistics performance has increased overall in India, there remain differences between states. Precise data, such as that found in the NCAER paper, provides a starting point for understanding and quantifying logistics costs, contradicting the concept that they are as high as often assumed.

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