Eight, Ten or Thirteen Per Cent? The Argument Over India's Logistics Cost

Government Studies vs Historical Baseline Estimates

India's logistics cost as a share of GDP is one of the most quoted statistics in economic policy. It is also one of the least settled. In the past year, we found at least four different figures from different sources.

The government-commissioned study: The Department for Promotion of Industry and Internal Trade and the National Council of Applied Economic Research published a joint assessment on 25 September 2025, reported by Outlook Business as India's first systematic study. It estimated logistics costs at 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%. The study relied on secondary data, including supply and use tables, national accounts statistics and RBI balance of payments data. A government official was quoted as saying it was unclear whether such studies would be repeated regularly.

Earlier estimates: The same article cited earlier estimates: AVALON Consulting, for the Confederation of Indian Industry, put logistics cost at 10.9% of gross value added for 2015, and Armstrong & Associates, using a neural network model, estimated 13% of GDP for 2016. Those are different years, different denominators (gross value added in one case, GDP in the other) and different methods. They are not comparable with the 2023-24 figure, and a fall from 13% to 7.97% cannot be read off the numbers.

Recent Industry Claims & Five Reasons Estimates Diverge

Other recent claims: A KPMG blog from January 2026 said recent government assessments put logistics costs at "around 8 per cent of GDP", down from 13% to 14% "long cited as a structural disadvantage". It gave no named source or method for either. A page on The Statesman's website carried a teaser saying logistics cost had dropped to "10-10.7 per cent of GDP in the Financial Year 2026", linking it to a cumulative infrastructure investment of $360 billion, while its headline said logistics cost was "reduced by 10.7%". The teaser cited only "a report". We could not read the full article, and the headline and teaser are not consistent with each other.

Why the numbers differ: 1. Definition. Does the figure include inventory carrying costs, warehousing, packaging, in-house logistics of firms, and the cost of time? 2. Denominator. GDP, gross value added and goods output give different shares of the same rupee amount. 3. Method. A survey of firms, a model and an input-output table give different results. 4. Year. The structure of the economy changes, and so do fuel prices and freight rates. 5. Purpose. Advocacy for a policy tends to prefer the number that supports it.

“A claim that logistics cost fell needs an earlier number on the same basis.”

Interpreting 7.97% & The Small-Firm Disparity

What the 7.97% figure does and does not say: It tells us that, on the study's definition, logistics cost was a little under 8% of GDP in 2023-24. It does not tell us the trend, because the study is described as a first assessment. A statement that logistics cost "fell" requires a comparable earlier measurement, which the study does not provide.

The more useful number: The study also reported that firms with turnover below Rs 5 crore spend nearly 17% of the value of output on logistics, while large firms spend about 7.6%. This is more actionable than a national average, and we discuss it in our practical guide. A national average conceals a gap that matters to small manufacturers and traders.

How to Read a Logistics Cost Claim: Our Guide

How to read a logistics cost claim: our guide: 1. Ask for the definition. 2. Ask for the denominator. 3. Ask for the year and source. 4. Prefer a study with a stated method over a statement without one. 5. Be wary of a claim of a fall without an earlier figure on the same basis.

Policy Targets, Commercial Realities & Baseline Method

What it means for policy: Targets that rely on a poorly defined number can be met by redefining the number. A regular, consistent measurement would be more useful than another one-off.

What it means for business: Your own logistics cost, as a share of your sales, is the number that matters. If it is closer to 17% than to 7.6%, there are likely savings in consolidation, mode choice and inventory.

What we do not know: We do not know the DPIIT-NCAER report itself, only press coverage of it. We do not know which estimate best reflects reality.

A note on the word "first": The study was described as India's first systematic assessment. That is a strength, because it gives a documented baseline, and a limitation, because there is nothing earlier on the same method to compare it with. Until the exercise is repeated, claims about the direction of change rest on other numbers.