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Cost of Moving Goods: Logistics Makes Up 14% of India's GDP

High logistics cost impacts the competitiveness of Indian goods both domestically and abroad. Reducing logistics overhead is essential for growth.

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According to data from various sources, logistic costs as a percentage of GDP in India are estimated to be around 13-14%:

  • A report by the Economic Advisory Council to the PM in 2019 stated that logistic costs account for 13-14% of India's GDP.
  • A research paper published in the 'International Journal of Scientific and Research Publications' in 2020 estimated logistic expenses to be 13.6% of India's GDP.
  • KPMG estimates that logistic costs range from 13-15% of GDP in India compared to 8-9% for developed economies.

According to the Ministry of Commerce and Industry, logistics costs in India are high compared to developed nations due to factors like underdeveloped material handling infrastructure, fragmented warehousing, multiple checkpoints, poor integration between modes, and sub-optimal modal mix.

Most estimates peg logistics expenditure in India at around 13-14% of GDP presently, which is significantly higher than more developed countries. Improving warehousing, transport, inventory management and infrastructure can help optimize supply chains and reduce costs.