India’s logistics cost dives down to 8.35% of GDP

A recent study by National Council of Applied Economic Research (NCAER) has revealed that India’s logistics cost as a percentage of GDP is 8.35% on an average. For years, the government had been of the view that the logistics cost is 14% of GDP. Basing on the NCAER study the government has hired a consultant for assessing the logistics cost and to work out a framework for calculating the logistics cost based on the wholesale price index and the consumer price index. The NCAER survey has also calculated the logistics cost for individual commodities and sectors, which has revealed that the logistics cost for certain commodities has been as low as 6.05%. The 8% logistics cost brings India at par with developed countries. According to the Ministry of Shipping officials, “we are setting the objective of bringing down the logistics cost to whatever low is possible, to make our exports and domestic economic activity more effective.” The commerce and Industry Ministry is now looking at working out an index which can be calculated on a regular basis taking a few commodities and corridors that have a large contribution to the logistics cost.