Member of the Economic Advisory Council to PM, Rakesh Mohan stated that he is unable to determine the justification for the assumption that logistics costs represent 14% of India’s GDP and that this assumption serves as the foundation for government initiatives like PLI (Production Linked Incentive) programmes. Mohan further stated at the event that he was unable to determine how 14% of the logistic cost figure was calculated by an economic think group or researcher.
It appears that most people agree that India’s logistic expenses are considerably higher than the industry averages. The former deputy governor of the RBI claimed that despite their best efforts, they were unable to determine the source of the data report (CRIER report), which repeatedly states that India’s logistics costs account for 14% of GDP. The government is basing its decisions on estimates that place India’s logistics expenses at 13–14% of its GDP. To strengthen industry competition and lower logistical costs, the government has implemented the PM GatiShakti Initiative and the NLP (national logistics policy).
To strengthen industry competition and lower logistical costs, the government has implemented the PM GatiShakti Initiative and the NLP
The claim that manufacturing contributes 17% of GDP cannot possibly be accurate. Consequently, the value contributed by logistics to the country. Rakesh Mohan claims that if the 14% logistics cost in India is accepted, it will result in policies the industry likes, like the Production-linked Incentive programme. They need money, according to industry insiders, because their high logistics costs make them uncompetitive. They did, however, note that they require more than farmers do.
A Production-linked Incentive Scheme for fourteen industries, including textiles, white goods, and auto parts, had been declared by the government. The Production-linked Incentive scheme seeks to improve exports, boost employment, and make domestic manufacturing more competitive on a global scale. Because they do result in financial outlays, Mohan said that these issues need to be taken very seriously.
PLI Scheme for 14 industries, including textiles, white goods, and auto parts, had been declared by the government
He highlighted that the logistics division of the Ministry of Commerce and Industry had received a report from the economic think tank NCAER in 2019 that estimated India’s logistics costs to be 8.8% of GDP in 2017–18, which is not excessive as compared to other nations. The economic survey that followed this report is something we keep referencing. Economic survey 2022–2023 noted that compared to the global benchmark of 8%, logistics expenses in India have been between 14–18% of GDP. The Ministry of Commerce and Industry announced last month that a task group would be established to create a framework for calculating the cost of logistics in India.
According to some estimates, the government believes that the country’s logistics costs account for between 13 and 14 per cent of its GDP. NLP and PM GatiShakti’s plan has been implemented by the government to increase industry competitiveness and lower logistics costs.