India's logistics cost drops to 7.97% of GDP; new city-level reforms launched

Union Minister of Commerce and Industry, Piyush Goyal, on September 20, has unveiled a new report the nation's logistics costs at an estimated 7.97% of GDP, lower than the widely cited 13-14%. The report was launched alongside the transformative city-level logistics initiatives aimed at making India a global supply chain hub.

The report, Assessment of Logistics Cost in India, prepared by the National Council of Applied Economic Research (NCAER) for the Department for Promotion of Industry and Internal Trade (DPIIT), provides the country's first-ever comprehensive and scientifically derived logistics cost framework.

This data-driven assessment replaces previous estimates, which were often based on external studies or incomplete datasets, causing confusion among policymakers and global investors.

Speaking at the launch, Minister Goyal said, "For the first time, India will have a uniform framework for measuring logistics costs, allowing us to benchmark ourselves against global practices and drive targeted improvements".

Coinciding with the report's release, the Ministry launched a series of grassroots initiatives spearheaded by DPIIT. At the forefront is the rollout of integrated city logistics plans across eight cities, a collaborative effort with the Asian Development Bank (ADB) under the Strengthening Multimodal and Integrated Logistics Ecosystem (SMILE) programme.

This city-centric approach aims to translate the high-level vision of the National Logistics Policy (2022) into tangible, on-ground action.

"This exercise will help assess existing logistics infrastructure, identify gaps, and provide a roadmap for improving efficiency and reducing costs," Minister Goyal stated.

"This marks just the beginning, with the objective of replicating such plans nationwide to ensure smoother movement of goods, enhanced competitiveness, and stronger supply chain resilience."

The initiatives are part of a multi-pronged government strategy to overhaul the logistics sector. This includes the creation of a logistics data bank, infrastructure development by the National Industrial Corridor Development Corporation (NICDC), and structural reforms like the Goods and Services Tax (GST).

The new assessment framework offers granular insights into costs across different transport modes, product types, and firm sizes, providing evidence-based guidance to strengthen India's supply chain ecosystem.

The report also notes a positive trend: the growth rate of logistics costs is gradually slowing compared to the growth in non-services output, indicating that recent reforms are already yielding results.

By combining robust data with targeted, city-level implementation, these measures are central to the government's ongoing efforts to enhance the ease of doing business, reduce inefficiencies, and firmly position India as a competitive global logistics hub.