Government ponders to issue new guidelines for measuring logistics costs

  • July 19, 2022
  • News

The GOI is weighing a proposal to roll out a new guide to measure the logistics costs. This move is significant because till now there has been no official estimate of logistics costs in India and the aim is to reduce such costs which have been a barrier to the country’s export competitiveness.

The new policy is set to reduce the costs by up to 5% points over the next five years. The eight states of India, Gujarat, Uttar Pradesh, Haryana, Assam, Telangana, Kerala, Bihar, and Chattisgarh have adopted their own logistics policies, encouraged by the Centre and the growing importance of logistics contributing to the GDP.
India’s logistics sector is extremely complex and has the involvement of over 20 government agencies, 40 partnering govt. agencies and 37 export promotion councils and they all together manage 500 certifications covering over 10,000 commodities.

As per the 2016 HSBC report, the domestic issues, including the high logistics costs are the major concern for the slowdown in the country’s export. The Economic Survey was done in 2017-18 and estimated that a 10% reduction in logistics costs could result in a 5-8% export growth. Hence, the thrust on reducing costs of logistics came into the discussion after the govt. created a new logistics division in the commerce department to understand, and make changes to existing policies and procedures, find out the gaps, and introduce technology to resolve them.
Since then India has improved its global ranking in the World Bank’s Logistics Performance Index (LPI) from 54 to 44 in 2018. India has done well on a few parameters like tracking and tracing, and timeliness but did not score well on customs, infrastructure, and logistics competence of LPI.

“With Gati Sakthi NMP also working around the logistics sector, India is sure to improve on the performance parameters. The country’s road logistics market alone is estimated to grow at an annual growth of 8% to reach $330B by 2025”, said a customs official.