Sukumar Sah
NEW DELHI: For years, India’s economic competitiveness has been held back by a persistent constraint: the high cost and inefficiency of moving goods. Logistics costs, often estimated to be 13-14 per cent of GDP, remain significantly higher than the 8-10 per cent typical in developed economies. This gap has functioned as a silent tax on industry, eroding its export competitiveness and raising domestic prices.
In response, the Government has launched an ambitious push by way of PM Gati Shakti, the National Logistics Policy, dedicated freight corridors, and a massive expansion of highways, ports, and digital platforms. The narrative is clear – India is in the midst of a logistics revolution.
Physical backbone
There is little doubt that the physical backbone has improved. India now builds over 30 km of highways per day, compared to about 12 km a decade ago. The Eastern and Western Dedicated Freight Corridors – spanning over 2,800 km – have begun operations, cutting transit time between Delhi and Mumbai by nearly 40 per cent and raising freight train speeds from 25 kmph to 60-70 kmph.
At ports, turnaround time has fallen from around four days a decade ago to less than a day at major facilities. The Unified Logistics Interface Platform (ULIP) integrates over 30 systems, promising to reduce documentation and delays.
Yet, beneath these visible gains lies a more complex reality. Logistics efficiency is not just about infrastructure; it depends on seamless integration across road, rail, ports, warehousing, and last-mile connectivity. It is here that gaps persist.
The modal mix remains skewed. Road transport still accounts for 55-60 per cent of freight movement, compared to 25-30 per cent in countries like China. While freight corridors are a step forward, first- and last-mile connectivity to industrial hubs remains uneven, diluting long-haul efficiency gains.
Logistics costs
Costs, too, have not declined as sharply as expected. Diesel accounts for nearly 40 per cent of trucking costs and remains volatile. Toll charges have risen with highway expansion, and logistics costs for MSMEs are estimated to be 20-30 per cent higher than for large firms. Warehousing is modernising, but nearly 80 per cent of facilities remain unorganised and fragmented.
Regulatory frictions persist despite digitisation. India is ranked 38th in the World Bank’s Logistics Performance Index 2023, an improvement but still behind key competitors. While customs processes have improved, exporters report inconsistencies across states. Platforms such as ULIP are promising, but their adoption remains uneven. The ‘soft infrastructure’ of coordination and governance continues to lag behind physical assets.
There is also a distributional divide. Large corporations, with integrated supply chains and digital tracking, are already benefiting from improvements. Smaller firms often lack access to such efficiencies, creating a dual-speed logistics ecosystem where gains are concentrated.
There is no denying that the country’s physical backbone has strengthened by way of improved logistics. Yet, logistics efficiency is not just about infrastructure; it depends on seamless integration across road, rail, ports, warehousing
Better positioned
None of this diminishes the fact that progress has been made. India is better positioned today than a decade ago. But revolutions are not declared; they are experienced. For manufacturers and exporters, what matters is not infrastructure alone, but predictability, cost, and speed.
This is where the gap between promise and reality becomes evident. The building blocks are in place, but the system has yet to be fully consistent.
The next phase of reform must move beyond asset creation to system optimisation. The National Logistics Policy aims to reduce costs to 8 per cent of GDP by 2030 – an ambitious target that underscores both the scale of the challenge and the distance yet to be covered.
