India’s logistics costs have significantly reduced, now accounting for only 7.8–8.9 per cent of GDP, compared to previous estimates of 13–14 per cent, according to a report released on Thursday by the National Council of Applied Economic Research (NCAER). The decline reflects the growing success of the PM Gati Shakti National Master Plan, the government’s flagship infrastructure coordination programme aimed at improving efficiency across all modes of connectivity.
The report, titled Gati Se Pragati, marks a major milestone in India’s drive toward reducing logistical inefficiencies that have historically hampered competitiveness and economic growth. Although India’s logistics costs remain higher than the global benchmark of 6–8 per cent, the findings signal strong progress and the potential for the country to reach world-class standards in the near future.
India also moved up from 44th to 38th in the World Bank’s Logistics Performance Index in 2023, highlighting improvements in infrastructure, logistics services, and shipment timelines.
The PM Gati Shakti plan integrates seven infrastructure engines—roads, railways, airports, ports, waterways, mass transit, and logistics infrastructure—into a coordinated development framework. The plan’s ambitious targets include expanding the national highway network to 200,000 km, enhancing railway freight capacity to 1,600 million tonnes, and establishing up to 220 new airports.
However, the report cautioned that despite early success and a solid institutional structure, several implementation challenges persist. These include funding gaps, complex regulatory procedures, land acquisition hurdles, and lack of coordination between central and state authorities.
To overcome these bottlenecks, the study recommends targeted interventions such as deploying real-time project monitoring systems, creating innovative infrastructure financing models, boosting private sector involvement, and increasing capacity building within implementing agencies.
The economic analysis shows that infrastructure investments yield a high multiplier effect, generating between ₹2.5 and ₹4 of economic output for every ₹1 invested, with the greatest impact seen in road and rail sectors.
Socio-economic benefits also extend to employment generation, environmental sustainability, regional equity, and improved quality of life. Inland waterways, while still underutilised, represent an area with significant untapped potential.
The report concludes that sustained political will, continued funding, and adaptive management of coordination mechanisms are crucial to the long-term success of the Gati Shakti programme.
