India's logistics cost, pegged at 14 percent of the GDP for long, may have come down to around 10 percent, thanks to faster freight movement, reduced inter-state bottlenecks under GST, and significant improvements in infrastructure, Central Board of Indirect Taxes & Customs (CBIC) Chairman Sanjay Kumar Agarwal said on December 18.
“The logistics cost as a percentage of GDP cannot remain constant at 14 percent. Maybe, with some other calculations, I heard that it has come down to 10 percent. We will have to further work on it to determine the actual logistics cost in India,” he said.
Speaking at a Confederation of Indian Industry (CII) event, Agarwal emphasised the role of multi-modal connectivity and targeted reforms in bringing down logistics cost and boosting the country’s export competitiveness.
Agarwal pointed out that logistics costs in developed nations are typically 8-9 percent of the GDP to stress on India’s need to narrow the gap further.
The Goods and Services Tax (GST) regime has been a game-changer in reducing transit times, he said. “With the introduction of GST, the time taken at state borders has disappeared. The road infrastructure is better, and freight movement is much faster now.”
He credited initiatives like the Gatishakti National Master Plan for addressing structural challenges in logistics and infrastructure. He cited upcoming infrastructure projects, such as seaports and airports, as critical to bridging logistics gaps.
“Multi-modal connectivity via Gatishakti aims to cut down logistics costs significantly. New seaports and airports, including Jewar in Uttar Pradesh and Rajkot in Gujarat, are soon to be operational and will provide critical links to overcome logistical bottlenecks,” he said.
Customs Modernisation to Aid Exporters
The CBIC has also been focusing on streamlining export-import processes to reduce clearance times. “We are conducting studies to reduce release times for exports and imports at customs. The focus is on addressing structural challenges faced by exporters to make India’s exports more competitive globally,” Agarwal shared.
India’s high logistics cost is often seen as a barrier to trade competitiveness as it adds a burden on exporters and manufacturers.
As the government continues to roll out infrastructure projects and implement policy changes, Agarwal emphasised that ongoing evaluations and studies will play a key role in measuring the progress and ensuring sustained improvements in the logistics landscape.
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