These statistics were shared in a report by think tank National Council of Applied Economic Research (NCAER) and the Department for Promotion of Industry and Internal Trade (DPIIT).
While this 1% decline in logistics cost may look paltry, it has significant implications on the country’s manufacturing sector, export competitiveness and global positioning.
A significant contribution towards further bringing down the logistics cost has been by the Indian Railways, in the form of initiatives to increase freight carrying capacity, improved speed of freight trains, reduce freight costs, creation of dedicated freight corridors, last-mile connectivity between railheads, roads and ports, PM Gati Shakti, industry status for logistics, multimodal connectivity, digital initiatives in logistics, City Logistics Plans, Multimodal Logistics Parks, and creation of storage infrastructure are further expected to reduce logistics costs.
Trends in trade flows, product groups, EXIM and domestic cargo movement have a serious impact on logistics cost and their correlation needs to be critically analysed to measure each elements impact in calculating the logistics cost.
In order to set clear framework and benchmarks for understanding logistic costs in India, the centre got report prepared by the NCAER with the guidance of the Asian Development Bank (ADB) and task force members. The report would form the basis of (a) a baseline aggregated logistics cost estimate and (b) a framework for long-term logistics cost calculation. It was reviewed by external experts from the World Bank Group. Developing of frame work for calculating logistics costs is a wonderful step and shows the intent of all stakeholders to reduce costs.
Commerce Minister Piyush Goyal recently reiterated the government’s commitment to bring down the logistics costs to 5-6 per cent. It bodes well for the economy as well as exporters competing at the global level now. Logistics will be a cornerstone in the endeavour to make India a $35 trillion economy by 2047. States including Haryana, Punjab, Telangana, Uttar Pradesh, Andhra Pradesh, Gujarat, Karnataka and Tamil Nadu have made better progress in reducing logistics costs . Goa, Odisha, West Bengal, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Manipur, Meghalaya, Mizoram need to catch up in terms of infrastructure to further bring down the logistics cost.
