Logistics costs were estimated at 13–14% of GDP for 2023–24, reflecting infra gaps and an informal ecosystem. Today, that narrative is changing. Logistics costs are projected at 7.97%, marking a vital moment in India’s economic transformation. This decline is not incidental, it is the outcome of growing digital maturity.
While informality still characterises a major portion of Indian logistics — through independent truckers, small transporters, and local warehouses — the system is moving towards greater efficiency, transparency, and data-driven decision-making. The next phase of growth will depend on how effectively these informal elements are integrated into the formal logistics framework.
Declining logistics costs
Several structural and policy-led initiatives over the past decade have contributed to this shift.
Pan-India infra build-up
Large-scale national programmes such as the PMGS, DFCs, Bharatmala Pariyojana, and Sagarmala have improved connectivity. By reducing transit times and improving multimodal integration, these initiatives have lowered transportation costs and improved reliability across supply chains.
Modal mix transformation
A gradual but meaningful shift towards rail and waterways — more cost-efficient than road transport — has helped reduce freight costs. Rail transport offer lower expenditure per tonne-kilometre, making it attractive for long-haul and bulk cargo movement.
Digital interventions
Digitalisation has emerged as a critical enabler of efficiency and transparency. Platforms such as the Logistics Data Bank and the Unified Logistics Interface Platform are transforming how logistics data is captured and shared.
Policy, regulatory reforms
The introduction of Goods Service Tax (GST) and e-waybills has streamlined inter-state movement, reduced checkpoints, and waiting times. These reforms have improved cost efficiency and the overall quality and predictability of logistics services.
Formal-informal divide
Despite these advances, the logistics sector in India remains highly fragmented. Organised players typically have access to capital, technology, and compliance systems, while informal operators rely on local expertise and experience. The goal should not be displacement, but integration.
Key enablers:
- Digital inclusion: Expanding platforms, such as ULIP to smaller operators can enhance visibility, route optimisation, and asset utilisation
- Access to finance: Digital footprints improved creditworthiness, enabling players to access financing and invest in productivity-enhancing assets
- Capacity building: Training and support to adopt standardised processes and basic technologies can improve efficiency and service reliability
Lowering logistics costs from 13–14 per cent to under 8 per cent of the GDP is an achievement for India’s competitiveness and supply chain resilience. Sustaining this will require integration of informal logistics service providers into a digital-first ecosystem.
