Government Likely To Come Out With Logistics Cost Estimate Framework On Thursday

The government is expected to release a framework to assess the logistics cost in the country to get a realistic estimate tomorrow, an official has said.

At present, the government is going by certain estimates, suggesting India's logistics cost stands at about 13-14% of the country's GDP (gross domestic product).

Sumita Dawra, Special Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT), had earlier stated that the government is coming out with its logistics cost framework.

The framework would include elements of this cost and how to measure that.

Acknowledging the necessity for targeted policy interventions, a report containing baseline aggregated logistics cost estimates; and a framework for long-term logistics cost calculation is now ready and has been reviewed by external experts from the World Bank, the official said.

"This comprehensive report is scheduled for the launch on Dec. 14," the official added.

The objective of this endeavour extends beyond global benchmarking, aiming for policy-making, identifying challenges in the logistics ecosystem, devising targeted interventions, optimising costs, enhancing sector efficiency, and ultimately boosting India's global competitiveness.

The official said that the report titled 'Logistics Costs in India: Assessment and Long-Term Framework' will be released on Dec. 14.

This was one of the targets under the National Logistics Policy, released in September last year.

Globally, there are different methodologies to calculate logistics costs at a macroeconomy level.

Capturing origin-destination (O-D) pair-wise, commodity-wise, geography geography-wise data is critical for accurate estimations.

However, the current available non-official estimates of logistics costs (8 to 13% of the GDP) lack a conclusive and scientific calculation framework.

To align India's logistics costs with global benchmarks by 2030, a need was felt to develop a scientific logistics cost calculation framework, which is inclusive and stands the test of various statistical and data-based methods and then collect the data (primary and secondary) for analysis.

For this purpose, the secondary data sources published by the Ministry of Statistics and Programme Implementation (MoSPI), such as Supply Use Tables, and National Accounts Statistics, were used.

The Logistics Division of the Commerce and Industry Ministry has been actively engaging with national and international stakeholders, including academia and experts, to arrive at a robust and comprehensive framework.

In view of this, a Logistics Cost workshop was organised by DPIIT in collaboration with ADB on March 20 this year. The emphasis was on convening leading experts worldwide with expertise in relevant areas to learn from international best practices for estimating logistics costs and charting out the way ahead.

As a way ahead, a task force was constituted. This task force is dedicated to developing a comprehensive framework for estimating logistics costs, including parameters/variables, data sources, approach, model for logistics cost calculation, and agencies to be onboarded.

The task force convened multiple meetings from March to September 2023, during which they identified the essential components of logistics cost estimation, along with secondary data sources, including transportation cost; warehousing and storage cost; auxiliary support services cost; packaging cost, insurance cost; and other administrative / operations cost.

Logistics cost plays a key role in facilitating trade and enhancing the competitiveness of traders.