Image Source: The Hindu Business Line
In a landmark move aimed at boosting economic efficiency and competitiveness, the Government of India unveiled a comprehensive, scientifically derived framework to calculate and benchmark the nation’s logistics costs. Officially launched by Union Minister of Commerce and Industry Piyush Goyal on September 19, 2025, this initiative directly supports the objectives of the National Logistics Policy (2022) and sets a new standard in policy planning and industry transparency.
Key Highlights: From Inconsistent Estimates to Scientific Accuracy
For the first time, India will have a reliable, uniformly accepted method for estimating logistics costs, integrating secondary data sources and extensive nationwide surveys.
Prior to this, India’s logistics costs were often estimated between 13-16% of GDP based on partial or external studies, leading to fragmented understanding and inconsistent policy responses.
The current comprehensive assessment, prepared by NCAER for the Department for Promotion of Industry and Internal Trade (DPIIT), estimates logistics costs at approximately 7.97% of India’s GDP—a significant update that reflects recent reforms and efficiencies.
Methodology and Framework Features
The hybrid methodology includes a detailed capture across transport modes (road, rail, air, and waterways), product categories, and diverse firm sizes.
Estimates include freight cost per tonne-kilometre and emphasize the role of multimodal logistics and integrated supply chains in cost reduction.
The framework will enable tracking of logistics cost evolution, providing rigorous metrics to support policy adaptations and industry benchmarking.
Boosting Industrial Competitiveness: The Industrial Park Rating System 3.0
Alongside the launch, Minister Goyal introduced the Industrial Park Rating System (IPRS) 3.0, developed with support from the Asian Development Bank.
The system benchmarks approximately 20 indigenous industrial parks and smart cities, classifying them as Leaders, Challengers, and Aspirers based on infrastructure quality, connectivity, and business ecosystem.
This aims to foster healthy competition, improve investor confidence, and guide targeted developmental interventions.
Strategic Initiatives Underpinning Cost Reduction
The National Logistics Policy advocates infrastructure investments such as dedicated freight corridors, expressways, and port modernization that shorten transit times and cut expenses.
Digital tools like FASTag, e-way bills, and streamlined GST processes have decreased interstate delays, contributing significantly to efficiency gains.
Development of Multi-Modal Logistics Parks (MMLPs) supports seamless cargo movement across rail, road, and waterways.
Warehousing reforms, including a hub-and-spoke network model supported by the Warehousing Development and Regulatory Authority (WDRA), are addressing supply chain bottlenecks, especially for perishables and processed goods.
Broader Economic and Global Implications
Lower logistics costs directly translate into enhanced export competitiveness by reducing trade transaction expenses and improving supply reliability.
Regional economies benefit from better connectivity and access to global markets, enabling small and medium enterprises to participate more effectively.
Environmental gains are realized as a shift toward rail and waterways reduces carbon footprints and urban congestion.
The government’s efforts aim to position India as a global logistics and manufacturing hub, aligning with initiatives like Make in India and the Production Linked Incentive scheme.
Challenges and the Road Ahead
While the framework represents a major stride, policy execution gaps, infrastructural delays, and external geopolitical factors could impact steady progress.
Accurate and continuous data collection remains crucial to maintain a reliable logistics cost database.
The government commits to ongoing reforms and stakeholder engagement to bridge gaps and ensure sustained improvement.
Conclusion
India’s launch of a scientific framework for logistics cost measurement marks a transformative step toward modernizing its supply chains, enhancing industrial competitiveness, and scaling global trade. By providing policymakers and industry with robust data and actionable insights, the initiative not only debunks previous misconceptions but also sets the foundation for India’s emergence as a major global logistics hub in the years ahead.
Sources: PIB India, Devdiscourse, The Economic Times, Business Line
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