Logistics Cost in India: Assessment and Long-Term Framework: Ministry of Commerce and Industry

December 15, 2023

GS Paper III Indian Economy

Context: Recently, the Ministry of Commerce and Industry launched a report titled “Logistics Cost in India: Assessment and Long-Term Framework’.

About Report: Logistics Cost in India Assessment and Long-Term Framework

The report is prepared by the National Council of Applied Economic Research (NCAER) with guidance of the Asian Development Bank (ADB) experts.
Through this report, the government desires to:
- Develop a scientific logistics cost calculation framework that is inclusive and stands the test of statistical and data-based methods.
- To calculate credible logistics cost components estimates.
- Data-based planning and policymaking.

National Council of Applied Economic Research (NCAER)

About: Established in 1956, NCAER is India’s oldest and largest independent, non-profit, economic policy research institute.
Work areas:
- Human Development and Data Innovation
- Computable Policy Analysis
- Investor Education and Protection Fund Chair Unit

Logistics Cost in India: Assessment and Long-Term Framework: Key Findings of Report

Outlook: It pegs India’s logistics cost in the range of 7.8- 8.9%.
It presents a baseline aggregated logistics cost estimate and a framework for long-term logistics cost calculation.
Data source: It uses secondary data from,
- The Supply Use Tables
- National Account Statistics of Ministry of Statistics and Programme Implementation (MoSPI)
- The NCAER’s 2019 study, “Analysis of India’s Logistics Costs”.
Recommendation: It recommends a hybrid approach using primary (covering all trade flows, product types, industry trends, Origin-Destination pairs, etc.) and secondary survey data, as well as real-time Big Data to provide an estimate of logistics cost.

Logistics Sector in India

India ranks 38 in the World Bank’s Logistics Performance Index.
The logistics sector in India was valued at US$ 250 billion in 2021, with the market predicted to increase to an astounding US$ 380 billion by 2025.

Government’s Role Towards the Development of the Logistics Sector:

National Logistics Policy(2022): It aims to drive economic growth and business competitiveness of the country through a logistics network ie. integrated, seamless, efficient, reliable, green, sustainable and cost-effective.
National Logistics Law: It is a unified legal framework to achieve One Nation, One Contract and support the One Nation, One Market objective The law’s provisions will make it possible to assign a distinct logistics account number.
Logistics Master Plan: it is a plan to integrate several projects and activities to expand the mix of intermodal and/or multimodal transportation.