The commerce & industry ministry is considering a proposal to roll out an index to gauge the country’s logistics costs. This is certainly required as there is no official estimate of logistics cost in India and the key objective of the National Logistics Policy is to bring down the logistics costs, which have long been blamed for eroding the country’s export competitiveness. “We are actively considering working out a framework for the assessment of logistics costs and also the possibility of having an index, which can help us in the determination of and/or monitoring of logistics costs at any point of time,” informed a Ministry official.
Certain private agencies have pegged Indian logistics cost at 13-14% of GDP but some experts have raised questions over the methodology used to arrive at such cost, given the fragmented nature and the complex dynamics of the logistics sector, and opaque pricing models adopted by relevant players. However, for these very reasons, estimating the actual logistics costs will warrant an elaborate exercise. The new policy will likely set an ambitious target of reducing the costs by up to five percentage points over the next five years.
