India's logistics costs drop to 8.9% of GDP due to better infrastructure

India's logistics costs have fallen to 8.9 per cent of gross domestic product (GDP), as better infrastructure created by higher government expenditure on highways, ports and digitisation has speeded up the movement of cargo, according to a report released on Friday.

The report 'Logistics Cost in India', authored by National Council of Applied Economic Research (NCAER), said logistics costs including transportation, warehousing, insurance and administrative charges had come down thanks to improvements in road network, tax reforms and digitisation of supply chains.

Logistics costs are now comparable to many Western economies, and the government is aiming to further improve infrastructure through higher state and private investments, said Rajesh Kumar Singh, Secretary, Department for Promotion of Industry and Internal Trade (DPIIT).

"In terms of competitiveness, logistics costs for our producers - both domestic and exporters - have come down," he said at the launch of the report.

The logistics costs were down in the range of 7.8 per cent to 8.9 per cent of GDP in 2021-22, compared to 8.8 per cent to 10 per cent of GDP in 2012-13, according to Poonam Munjal, lead author of the report.

India has climbed six places to rank 38th out of 139 countries in the World Bank's Logistics Performance Index for 2023, due to its improving road and port networks and digitisation of supply chains.

The average dwell time, the waiting time for a truck cargo at a port, was just three days in India when compared to seven days in the United States and 10 days in Germany, according to the World Bank report.

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