Page 23 - ITLN January - February 2024 Issue for the Website

Figure 2: Components of Logistics Costs (as % to GDP)
10.03
9.81
9.89
9.41
9.22
9.01
8.90
8.85
8.72
8.65
8.30
8.12
7.95
7.85
3.52
3.46
3.31
2.35
2.34
2.30
3.26
2.20
2.24
2.20
2.19
1.331.33
1.291.29
1.351.35
1.291.29
1.241.24
1.21 1.21
1.15 1.15
1.14 1.14
1.351.35
0.540.54
0.500.50
0.540.54
0.470.47
0.270.27
0.300.30
0.470.47
0.360.36
0.260.26
3.62
3.63
3.62
3.58
3.58
3.56
3.47
3.47
3.51
3.51
3.51
0.870.87
0.820.82
0.770.77
0.670.67
0.670.67
0.730.73
0.670.67
0.630.63
0.570.57
LB UB
LB UB
LB UB
LB UB
LB UB
LB UB
LB UB
LB UB
LB UB
2013-14
2012-13
2014-15
2021-22
2011-12
2015-16
2017-18
2018-19
2016-17
Water Transport
Railway Transport 3.53 3.63 Land transport Air transport 8.05 2.14 3.42 9.13 3.22 3.42 7.76 2.06 3.32 8.80 3.10 3.32 Supporting transport services 3.33 3.56 Other cost 3.25 3.51

Note: Years 2019-20 and 2020-21, being abnormal years, have been excluded from the study.
Sources: NCAER computations based on Supply and Use Tables, various years; 2023 National Accounts Statistics.

Figure 3: Total Logistics Costs (as % GDP)
Total Logistics Costs (as % GDP) estimation of freight
volume, value, and time
LB UB costs across India, forming
10.0 a robust sampling frame for
9.9 9.8
9.4 a nationwide survey.
9.1 9.0 9.2 Prior to the release of
8.7 8.8 8.6 8.8 8.9 these official estimates,
8.3 experts had been relying
8.1 7.9 8.1
7.8 7.8 on estimates from various
studies, placing logistics
costs in India anywhere
between 8-14%. The
absence of an official
estimate prompted the
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2021-22 government to launch the
National Logistics Policy in
LB = lower bound, UB = upper bound.
Speaking on the transformative
Note: Years 2019-20 and 2020-21, being abnormal years, have been excluded from the study. September 2022, with a commitment to
impact of these measures, Rajesh
reducing India's logistics cost to GDP
Sources: NCAER computations based on Supply and Use Tables, various years; 2023 National Accounts Statistics.
Kumar Singh, Department for from 13% to 7.5% within five years.
Promotion of Industry and Internal shown in Figure 3, suggests that logistics costs for
The interim assessment, as Union Home Minister Amit Shah, in
India fall in the range of 7.8%–8.9% of GDP for 2021-22, using the LB and UB
Trade (DPIIT) Secretary, emphasises,
March 2023, emphasised the strategic
shares of other components. importance of this reduction, stating
"The national logistics policy will While this interim assessment provides the logistics cost
covering all the production sectors, modes of transport, and geographies of the country but it
that it would enhance India's global
reduce the cost and enhance the
competitiveness of Indian industry."
competitiveness. The absence of
cannot present the costs separately for these parameters, which is an essential requirement to
He further highlights the significant
official data led to the establishment
track the logistics cost for a vast country like India. Hence, going forward, a comprehensive
investments made by India in both
study with a primary survey, is required. of a Task Force by DPIIT in March 2023
physical and digital infrastructure, to arrive at an aggregate estimate of
Figure 3 also shows a declining trend in logistic costs as percent to GDP in 2014-15 and 2016-
India's logistics costs and propose a
creating an enabling environment for
17, and the subsequent increase in 2017-18 and 2018-19. This could be due to several reasons,
comprehensive framework to track the
data-based planning and policymaking.
Industry leaders echo this sentiment,
including the following: progress of NLP interventions.
with Vineet Agarwal, MD of Transport Better roads and Comprising sectoral experts,
ϮϬ
Corporation of India, praising the robust highways, expansion ministries, and representatives from
logistics ecosystem fostered by better of port capacity, NITI Aayog and ADB, the Task Force
roads, highways, port expansions, and digitisation of trade held a series of meetings, drawing
digitisation. “The National Logistics documentation and credible conclusions. The resulting
policy, now in its sophomore year, vision is to align logistics costs
has clearly illustrated the need to digital transactions with global benchmarks by 2030,
increase multimodal logistics, lean including the use of contributing to India's aspiration of
heavily on digitisation and build national fastags for tolled roads becoming a developed nation with a
standards,” he added. have all contributed to USD 32.8 trillion economy by 2047.
The Confederation of Indian Industry a significantly robust In conclusion, the NCAER report is
(CII) also weighs in on the report, logistics ecosystem not just a compilation of statistics but
acknowledging its efforts to precisely a testament to India's commitment
quantify logistics costs and delineate Vineet Agarwal to fostering a conducive environment
the various components contributing Transport Corporation of India for economic growth. As the nation
to this overall expense. The CII sees navigates towards a USD 5 trillion
this as a crucial step towards informed economy, understanding and
decision-making for policymakers and optimising its logistics performance optimising logistics costs emerge as
industry stakeholders. and reducing costs. indispensable components of this
In the global arena, the World To provide a comprehensive transformative journey. The report, with
Bank's Logistics Performance Index understanding of logistics costs, the its meticulous analysis and strategic
for 2023 positions India at 38 out of report adopts a hybrid approach, recommendations, becomes a guiding
139 countries, marking a notable combining primary and secondary light for policymakers, industry leaders,
improvement by six places from 2018. survey data with real-time Big Data, and stakeholders, paving the way for a
This external validation underscores including E-way bills, GST, and FASTag more competitive and efficient logistics
the progress India has made in data. This methodology enables the landscape in India. 
21
www.itln.in January - February 2024