What India's First Logistics Cost Study Found, and What It Cannot Yet Tell Us

Headline Findings & Method

The Department for Promotion of Industry and Internal Trade and the National Council of Applied Economic Research published a joint logistics cost assessment on 25 September 2025. Outlook Business described it as India's first systematic assessment. We reviewed the coverage, not the report.

Headline findings: • Logistics costs were about 7.97% of GDP in 2023-24, or Rs 24.01 lakh crore at 2023-24 prices. As a share of non-services output, the figure was 9.09%. • Rail is the cheapest mode at about Rs 1.96 per tonne-kilometre. Air is the costliest at about Rs 72 per tonne-kilometre. Water transport is described as cost-effective and environmentally friendly, but the coverage gave no figure. • Fuel makes up 42.1% of road freight expenses. Diesel taxation, toll-plaza delays and heavy reliance on trucking were also named as cost drivers. • Firms with turnover below Rs 5 crore spend nearly 17% of output value on logistics. Large firms spend about 7.6%.

Method: According to the coverage, the study relied on secondary data, including supply and use tables, national accounts statistics and RBI balance of payments data. The coverage did not describe the method further. A government official was quoted as saying it was unclear whether such studies would be repeated regularly.

Our Arithmetic & Earlier Estimates

Our arithmetic: If Rs 24.01 lakh crore is 7.97% of GDP, then GDP at 2023-24 prices implied is 24.01 / 0.0797, about Rs 301 lakh crore. And Rs 24.01 lakh crore as 9.09% of non-services output implies non-services output of about Rs 264 lakh crore. Those implied values are ours and are internally consistent with a GDP larger than non-services output. We have not compared them with official national accounts totals.

How it compares with earlier estimates: The coverage cited AVALON Consulting for the CII, which estimated 10.9% of gross value added for 2015, and Armstrong & Associates, which estimated 13% of GDP for 2016 using a neural network model. These used different years, denominators and methods. Our companion pieces in the Logistics package and the Opinion section discuss why other recent claims of 8%, 10 to 10.7% and 13% to 14% cannot be compared with this one.

“A first estimate is a baseline, not a trend.”

What Is Most Useful & What the Study Omits

For a business, the firm-size gap is the most actionable result. If a small firm's logistics cost is 17% of the value of its output and a large firm's is 7.6%, then a small firm that cuts logistics cost by one-tenth gains 1.7 percentage points of margin, by our arithmetic, against 0.76 points for a large firm. Plausible reasons are scale, shipment size, bargaining power and mode choice, but that is our inference.

The cost per tonne-kilometre figures are also practical line-haul numbers, though they exclude first- and last-mile drayage.

What the study does not tell us: • A range or confidence interval for the 7.97%. • A breakdown into transport, warehousing, inventory and administration. • A trend, since it is a first assessment. • A state-level or sector-level split, at least in the coverage. • Treatment of in-house logistics and of time costs.

Questions for Authors & Citation Guidance

Questions for the authors: our list: 1. How are inventory carrying costs treated? 2. How much of the figure is in-house logistics of manufacturing and trading firms? 3. How was the firm-size result derived, and from what sample? 4. How will future updates handle revisions to national accounts? 5. What is the plan for repeating the study?

How to cite it: "The DPIIT-NCAER logistics cost assessment (published 25 September 2025, as reported by Outlook Business) estimated logistics costs at about 7.97% of GDP in 2023-24." Do not describe it as showing a fall in costs, because it provides no earlier measurement on the same method.