India’s logistics cost, which stood near 16% of GDP in earlier years, is expected to decline to below 10% by December 2025, as per government and industry projections. The target builds on a series of infrastructure reforms and policy initiatives aimed at improving transport efficiency.
🚚 Key Drivers Behind the Cost Reduction
1. Infrastructure Expansion & Highways
Major investments in highways, dedicated freight corridors, and coastal port connectivity are central to this drive. These projects—from Sagarmala port integration to western and eastern dedicated freight corridors—aim to reduce transit times and costs.
2. Digital Logistics & GST Benefits
Adoption of tools like FASTag and e-way bills have significantly reduced delays at state borders, benefiting from streamlined GST enforcement. CBIC officials estimated logistics costs may already be around 10% thanks to these changes
3. Multi-Modal Logistics Parks (MMLP)
The government’s Logistics Efficiency Enhancement Program (LEEP) is implementing large-scale MMLPs with rail, road, and warehousing access hubs to reduce intermodal inefficiencies.
4. Warehousing Reform
The Warehousing Development and Regulatory Authority (WDRA) is building up to 100,000 modern warehouses under a hub‑and‑spoke model, tackling supply chain inefficiencies especially for agricultural and processed goods.
5. Trade Efficiency & Customs Modernization
Customs reforms now allow around 90% of consignments to clear without inspection, significantly reducing export-import delays at major ports.
📉 From 16% to Under 10% — Timeline & Estimates
| Period | Logistics Cost (% of GDP) |
|---|---|
| Pre-2022 | Around 14%–16% |
| FY 2021–22 | 7.8%–8.9% (estimate) |
| End‑2024 Goal | 9% |
| Dec 2025 Target | Below 10% (expected to drop further) |
While NCAER and government estimates for FY2021‑22 already suggested a baseline of 7.8–8.9% of GDP, operational challenges and uneven data have kept official estimates cautious. The June 2025 update reaffirmed a 9% logistics cost target in the near term
✅ Benefits & Broader Impact
- Improved export competitiveness: Lower logistics cost enhances price competitiveness on international shipments, while faster movement boosts trade reliability.
- Boost to regional economies: Multimodal hubs and express corridors improve connectivity for hinterland industries and SMEs.
- Environmental and urban impact: Rail shift and waterway routes reduce carbon footprint and congestion. Delhi’s new logistics policy aims to relocate freight hubs away from city centres, easing pollution.
⚠️ Challenges & Risks Ahead
- Policy execution gaps: Infrastructure rollout delays can slow expected cost reduction.
- Data reliability: Logistics cost estimates still rely on secondary data; frameworks are being refined with primary surveys using FASTag & e-way data.
- External shocks: Geopolitical tensions—for instance, disrupting trade routes—could temporarily raise freight rates by 15–20%, especially for exporters.
🧭 Final Outlook
India is on track to bring logistics costs below 10% of GDP by December 2025, with strategic investments in infrastructure and policy enforcement. While past estimates already show single-digit logistics cost in FY22, reaching consistent operational averages across sectors depends on continued execution. Reliable data collection and infrastructure delivery will be key to sustaining and monitoring this transition.
