The fall and fall of the country’s logistics cost

Source: The post is based on the article “The fall and fall of the country’s logistics cost” published in “Mint” on 22^nd December 2023.

UPSC Syllabus Topic: GS Paper 3 – Infrastructure – Improvements in the Logistics Costs

News: Recently, a study was conducted by the National Council for Applied Economic Research (NCAER) commissioned by the Ministry of Commerce and Industry on India’s logistic cost.

What are the findings of the study?

The study shows a decrease in India’s logistics costs from 8.6%-9.8% of GDP in 2013-14 to 7.8%-8.9% in 2021-22. This contrasts with the earlier estimates, which placed logistics costs at 13-14% of GDP.

This decrease has been due to investments in infrastructure like roads, ports, and airports, along with the implementation of Goods and Services Tax (GST) and digitization of export-import processes.

However, experts argue that the NCAER calculation is not comprehensive as it excludes outsourced logistics costs.

What measures have been taken by India to reduce its logistic costs?

National Logistics Policy 2022: Read Here

PM Gati Shakti Plan: It aims to integrate existing and planned infrastructure projects and leverage technology for efficient movement of people and goods.

Read More: Logistics Sector in India and National Logistics Policy – Explained

Where does India stand globally in the logistic cost?

Read Here: India up 6 places on WB’s logistics index

What more measures are needed by India to reduce its logistic costs?

Increase Investment: India needs significant infrastructure investment to reduce its logistics cost.

Port, airport, and railway improvement: Improving throughput at ports, airports, and railways are crucial points for boosting logistics efficiency.

Outsourcing: Outsourcing logistic services can further enhance efficiency and cut costs.

Question for Practice: Analyze the steps undertaken by India to decrease its logistic costs. Suggest further measures required to address the issue.