{"id":45872,"date":"2025-06-21T18:38:03","date_gmt":"2025-06-21T13:08:03","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=45872"},"modified":"2025-06-24T16:10:14","modified_gmt":"2025-06-24T10:40:14","slug":"india-to-cut-logistics-cost-to-9-percent-by-year-end","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/21-06-2025\/india-to-cut-logistics-cost-to-9-percent-by-year-end","title":{"rendered":"India to Cut Logistics Cost to 9% by Year-End"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Infrastructure<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Union Road Transport and Highways Minister has said that India&#8217;s logistics cost will come down to 9% by the Year-End.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Background<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Logistics cost refers to<\/strong> the total expenditure incurred to move goods from the point of origin to the point of consumption.\n<ul class=\"wp-block-list\">\n<li>It includes Transportation cost, Warehousing cost, Inventory carrying cost and Packaging and administrative cost.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The <strong>Economic Survey 2022-23<\/strong> pointed out that logistics costs in India have been in the range of <strong>14-18% of GDP<\/strong> against the global benchmark of <strong>8%<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s logistics sector<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The logistics industry plays a vital role in the dynamic economic landscape of India by enabling the efficient movement of goods and services throughout the country&#8217;s large territory.<\/li>\n\n\n\n<li>The Indian logistics sector is one of the largest in the world and presents a huge addressable opportunity.<\/li>\n\n\n\n<li>The warehousing and logistics sector contributes 13-14% to India\u2019s GDP and is expanding to keep pace with the country\u2019s rapid economic growth.<\/li>\n\n\n\n<li>In <strong>2023,<\/strong> India ranked <strong>38<\/strong> out of the <strong>139 nations<\/strong> in the <strong>World Bank\u2019s Logistics Performance Index (LPI)<\/strong>, up six places from the previous rankings in <strong>2018<\/strong>.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Benefits of a Robust Logistics sector<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Economic Competitiveness: <\/strong>Efficient logistics reduces overall cost of goods and services, improving India\u2019s ability to compete globally.<\/li>\n\n\n\n<li><strong>Boosts Exports and Trade: <\/strong>Reliable, cost-effective logistics reduce turnaround time and improve delivery commitments.<\/li>\n\n\n\n<li><strong>Industrial Growth:<\/strong> Reduces input cost and improves Just-in-Time (JIT) production models.<\/li>\n\n\n\n<li><strong>Improves Ease of Doing Business:<\/strong> Efficient goods movement reduces compliance burden and inventory cost for businesses.\n<ul class=\"wp-block-list\">\n<li>Encourages both domestic and foreign investment.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Strengthens Supply Chain Resilience:<\/strong> Minimises disruption risks and delays, enhancing supply chain predictability and flexibility.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges with Logistics sector in India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Lack of Technology Adoption: <\/strong>Slow adoption of advanced technologies, such as Internet of Things (IoT), RFID (Radio-Frequency Identification), and automation.\n<ul class=\"wp-block-list\">\n<li>The lack of technological integration results in manual processes, errors, and increased costs.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Infrastructure Bottlenecks:<\/strong> Inadequate infrastructure, especially in terms of roads, ports, and last-mile connectivity, along with Poor road conditions and congestion can lead to delays and increased costs.<\/li>\n\n\n\n<li><strong>Higher logistics costs:<\/strong> India&#8217;s expenditure on logistics costs amounts to approximately <strong>13-14% of its Gross Domestic Product (GDP)<\/strong>, which is considerably higher than the global average of around <strong>8%.&nbsp;<\/strong><\/li>\n\n\n\n<li><strong>Inefficient Warehousing:<\/strong> Inefficiencies in warehousing, such as outdated infrastructure, lack of automation, and inadequate storage capacity, contribute to higher logistics costs.&nbsp;<\/li>\n\n\n\n<li><strong>Limited Modal Choice:<\/strong> Overreliance on road transport and limited use of alternative modes such as rail and coastal shipping contribute to higher logistics costs.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Steps taken by Government of India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Grant of Infrastructure status to Logistics sector: <\/strong>The government has granted infrastructure status to the logistics sector, enabling the industry to access cheaper finances.&nbsp;<\/li>\n\n\n\n<li><strong>PM Gati Shakti\u2019s initiative: <\/strong>It is a National Master Plan focused on multimodal connectivity to reduce logistics costs and stimulate economic growth.<\/li>\n\n\n\n<li><strong>National Logistics Policy (NLP): <\/strong>In 2022, NLP was launched to ensure quick last-mile delivery, end transport-related challenges, and ensure desired speed in the logistics sector.\n<ul class=\"wp-block-list\">\n<li>The policy aims to reduce logistics costs from the current <strong>14-18% of GDP<\/strong> to <strong>8% by 2030,<\/strong> aligning with global best practices.&nbsp;<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Dedicated Freight Corridors (DFCs):<\/strong> The government is working on the construction of dedicated freight corridors such as the Eastern Dedicated Freight Corridor and the Western Dedicated Freight Corridor.<\/li>\n\n\n\n<li><strong>Bharatmala Pariyojana:<\/strong> This is a flagship road and highways development program aimed at improving connectivity across the country. The project includes the development of economic corridors, inter-corridors, and feeder routes.<\/li>\n\n\n\n<li><strong><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/26-03-2022\/sagarmala-program\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/26-03-2022\/sagarmala-program\">Sagarmala Project<\/a>:<\/strong> This initiative focuses on promoting port-led development to reduce logistics costs for domestic and export-import trade. It includes the development of ports, coastal shipping, and inland waterways.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Digitalisation: <\/strong>It enables the digitisation of documents and transactions, reducing paperwork and improving the overall efficiency of logistics operations.&nbsp;<\/li>\n\n\n\n<li><strong>Data analytics: <\/strong>It can provide valuable insights into supply chain performance, allowing for better decision-making and optimisation of routes, inventory management, and resource allocation.&nbsp;<\/li>\n\n\n\n<li><strong>Technology upgradation: <\/strong>Technologies such as barcode scanning, RFID, and real-time tracking can significantly enhance tracking and tracing capabilities, improving operational efficiency and reducing costs.<\/li>\n\n\n\n<li><strong>Warehouse efficiency:<\/strong> Improved inventory accuracy, reduced warehouse stock, and optimized on-shelf stock availability, can enhance overall warehouse efficiency.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concluding remarks<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>As India positions itself as a global manufacturing alternative to China, efficient logistics will be key to outpacing competitors like Vietnam and Indonesia.&nbsp;<\/li>\n\n\n\n<li>Improved logistics performance will enhance trade competitiveness, generate employment, and help India emerge as a regional and global logistics hub.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.newsonair.gov.in\/india-to-cut-logistics-cost-to-9-by-year-end-union-minister-nitin-gadkari\/\" rel=\"nofollow noopener\" target=\"_blank\"><strong>AIR<\/strong><\/a><\/p>\n\n\n\n<p class=\"has-background\" style=\"background-color:#ebecf0\"><strong>Read this in Hindi:<\/strong> <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs-hindi\/21-06-2025\/%E0%A4%AD%E0%A4%BE%E0%A4%B0%E0%A4%A4-%E0%A4%B0%E0%A4%B8%E0%A4%A6-%E0%A4%B2%E0%A4%BE%E0%A4%97%E0%A4%A4-9-%E0%A4%AA%E0%A5%8D%E0%A4%B0%E0%A4%A4%E0%A4%BF%E0%A4%B6%E0%A4%A4\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs-hindi\/21-06-2025\/%E0%A4%AD%E0%A4%BE%E0%A4%B0%E0%A4%A4-%E0%A4%B0%E0%A4%B8%E0%A4%A6-%E0%A4%B2%E0%A4%BE%E0%A4%97%E0%A4%A4-9-%E0%A4%AA%E0%A5%8D%E0%A4%B0%E0%A4%A4%E0%A4%BF%E0%A4%B6%E0%A4%A4\">\u092d\u093e\u0930\u0924 \u0926\u094d\u0935\u093e\u0930\u093e \u0935\u0930\u094d\u0937 \u0915\u0947 \u0905\u0902\u0924 \u0924\u0915 \u0930\u0938\u0926 \u0932\u093e\u0917\u0924 \u0915\u094b 9% \u0924\u0915 \u0915\u092e \u0915\u0930\u0928\u0947 \u0915\u093e \u0932\u0915\u094d\u0937\u094d\u092f<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">The Union Road Transport and Highways Minister has said that India&#8217;s logistics cost will come down to 9% by the Year-End.<\/li>\n<p><\/p>\n<h3><strong>Background<\/strong><\/h3>\n<li class=\"ms-5\">Logistics cost refers to the total expenditure incurred to move goods from the point of origin to the point of consumption.<\/li>\n<li class=\"ms-5\">It includes Transportation cost, Warehousing cost, Inventory carrying cost and Packaging and administrative cost.<\/li>\n<li class=\"ms-5\">The Economic Survey 2022-23 pointed out that logistics costs in India have been in the range of 14-18% of GDP against the global benchmark of 8%.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/21-06-2025\/india-to-cut-logistics-cost-to-9-percent-by-year-end\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-45872","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/45872","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=45872"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/45872\/revisions"}],"predecessor-version":[{"id":46085,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/45872\/revisions\/46085"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=45872"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=45872"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=45872"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}