India’s Logistics Cost at 8% of GDP, Rail Most Efficient: Report

India’s logistics cost is estimated at 7.97% of its gross domestic product (GDP) in 2023-24, with rail logistics emerging as the most cost-efficient mode, averaging Rs1.96 per tonne per km, significantly lower than road transport (Rs11.03), the Department for Promotion of Industry and Iternal Trade (DPIIT) said in a report.

The report also showed that air transportation is the most expensive, albeit the fastest, mode of freight transport, averaging Rs 72 per tonne per km, which largely limits its use to high-value, time-sensitive commodities.

The report, titled “The Assessment of Logistics Cost in India,” was prepared by the National Council of Applied Economic Research (NCAER) for the department. It represents the country’s first scientifically derived estimate using a hybrid methodology combining secondary data with nationwide surveys.

“This study estimates logistics cost to be 7.97% of GDP and 9.09% of non-services output (agriculture, mining, and manufacturing), the latter being a better measure to track logistics costs and enable sub-national and international comparisions,” it said adding that transportation costs are the largest component of logistics cost.

“Until now, logistics costs in India were often misrepresented, with commonly cited figures of 13-14% of GDP derived from external studies or partial datasets. This led to inconsistent estimates, causing confusion among policymakers and global stakeholders,” the commerce ministry said.

Estimates for the previous five years show that the pace of growth in logistics costs is gradually slowing, attributed to initiatives such as PM Gati Shakti National Master Plan, dedicated freight corridors, the Sagarmala project, integrated check posts, and development of the unified logistics interface platform.

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