For a long time, the cost of moving goods across India has been higher than in many other manufacturing-driven countries. Even when our production capabilities grew, the price of storing, transporting, and managing goods made Indian products less competitive globally.
But now, something important has changed.
Recent data shows that India’s logistics cost has dropped to around 7.97% of GDP, compared to the earlier estimates of 13–14%. This reduction is not a small adjustment—it has real implications for manufacturing, exports, foreign investment, and overall cost competitiveness.
Why This Drop in Logistics Cost is a Turning Point
Cost competitiveness simply means the ability to produce and deliver goods at a price that customers find favorable, without compromising quality. When logistics becomes more efficient, total production cost automatically reduces.
This shift helps India in three major ways:
- Indian-made products become more price-competitive abroad.
Exporters can now offer better prices without losing profit. - Manufacturers benefit from smoother supply chains.
Less time wasted in transit means fewer delays and predictable delivery timelines. - Global companies reconsider India as a serious production base.
With China+1 becoming a global strategy, improved logistics strengthens India’s position.
This is how cost competitiveness & reform impact shows up in the real economy—not in theory, but on the ground.
What Enabled the Change?
A combination of policy reforms and infrastructure improvements:
| Reform / Initiative | Practical Impact |
| GST Implementation | Removed state border check delays; faster movement of trucks |
| Gati Shakti Masterplan | Integrated planning for roads, ports, rail, air |
| Bharatmala & Sagarmala | Better highways and port-led development |
| Dedicated Freight Corridors | Trains that move only goods — faster and cheaper |
| Digital customs & e-logistics | Less paperwork, reduced clearance time |
These steps work together to reduce friction, and in logistics, any reduction in friction lowers cost.
Real Opportunities Emerging Now
For Indian Businesses:
This is a good time to rethink supply chains, improve warehousing, and explore export markets more aggressively.
For Exporters:
Competitive pricing may open new doors in the Middle East, Africa, and Southeast Asia.
For Global Investors:
India is now a more dependable alternative for manufacturing scale, especially in sectors like electronics, textiles, automotive components, pharma, and food processing.
How Businesses Can Further Improve Cost Competitiveness
- Use centralized warehousing instead of multiple scattered storage units.
- Adopt digital fleet and inventory tracking tools.
- Move production units closer to industrial corridors or ports, where possible.
- Re-evaluate supplier networks to reduce unnecessary distance and cost.
- Encourage lean manufacturing & automation to reduce process wastage.
Small and steady improvements in daily operations have a direct impact on cost structure.