India’s Logistics Cost Drops to 10.7% of GDP, Saving Up to $133 Billion Annually: Report

India’s logistics sector has witnessed a significant transformation over the past decade, driven by large-scale infrastructure investments and policy reforms aimed at improving supply chain efficiency. According to a joint report by CII and Knight Frank, the country’s logistics cost has reduced to 10–10.7 percent of Gross Domestic Product (GDP) in FY26, compared to 13–14 percent a decade ago.

The report estimates that cumulative infrastructure investments of nearly $360 billion during the last ten years have helped generate annual savings of around $123–133 billion for the Indian economy. The improvement reflects the government’s continued focus on highways, rail corridors, ports, airports, logistics parks, and multimodal transportation networks.

India’s position in the global Logistics Performance Index (LPI) has also improved considerably. The country moved up from 54th position in 2014 to 38th position in 2023, highlighting progress in trade facilitation, transportation infrastructure, and supply chain management.

Despite these gains, the report noted that significant opportunities remain to improve logistics efficiency further. One of the key recommendations is the accelerated development of Multimodal Logistics Parks (MMLPs), which are expected to play a crucial role in reducing transportation costs and improving cargo movement across the country.

According to the study, India will require around 216 MMLPs with an average annual capacity of 16–17 million tonnes to achieve its freight transportation goals by 2047. These logistics hubs are expected to integrate road, rail, and other transport modes, helping reduce cargo handling time and improve overall operational efficiency.

Industry experts believe that continued dependence on road transport remains a major challenge. Better first-mile and last-mile connectivity, faster development of logistics parks, and improved rail freight integration are essential for achieving long-term logistics efficiency targets.

The report also highlighted successful international examples from Germany, the Netherlands, and Singapore, where integrated logistics parks have significantly improved supply chain performance. With continued investment and policy support, India is expected to strengthen its position as a global manufacturing, trade, and logistics hub in the coming years.