India's Logistics Costs Found To Be Lower Than Previously Estimated: NCAER Study

2025-09-24 08:57:59

(MENAFN- KNN India) New Delhi, Sep 24 (KNN) A recent study by the National Council of Applied Economic Research (NCAER) has estimated India's logistics costs at 7.97 per cent of GDP and 9.09 per cent of non-services output (agriculture, mining, and manufacturing) for 2023-24.

This is significantly lower than the 13-14 per cent figure often cited by government officials and industry players. The findings underline the need for targeted policy interventions to enhance efficiency and global competitiveness of Indian goods.

The study, commissioned by the Department for Promotion of Industry and Internal Trade (DPIIT), follows two earlier NCAER reports that also indicated single-digit logistics costs, closer to levels seen in developed nations. Transportation, the largest cost component, was analyzed across all modes.

Rail transport emerged as the most cost-efficient at Rs 1.96 per tonne-km, followed by waterways at Rs 2.30 per tonne-km. Road transport averaged Rs 3.78 per tonne-km, while air freight, at Rs 72 per tonne-km, remained the most expensive, mainly for high-value or time-sensitive goods.

The report also analysed warehousing costs, averaging Rs 30 per sq. ft. per month, rising to Rs 58.5 per sq. ft. for temperature-controlled facilities and Rs 56 per sq. ft. for hazardous cargo. Manpower accounted for 30 per cent of total warehousing costs.

Challenges across logistics modes include operational bottlenecks in railways, uncontrolled pricing for road transport, limited regional air cargo infrastructure, and seasonal variations in inland waterways.

NCAER recommended solutions such as Dedicated Freight Corridors, multi-modal logistics parks, modern cargo-friendly airports, automation, and GPS tracking to reduce costs and improve efficiency.

Union Commerce Minister Piyush Goyal highlighted that the study provides a robust, data-driven framework for policymakers, enabling informed interventions and tracking progress toward a competitive logistics ecosystem.

By offering precise cost estimates, sector-wise analysis, and actionable recommendations, the NCAER study is expected to serve as a strategic reference for both national and global logistics planning.

(KNN Bureau)

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