Home / Economy / New logistics cost index in the works to help with project formulation

NEW DELHI : India will soon have its own logistics cost index that will provide granular data expected to help investors and policymakers formulate projects and interventions in order to improve efficiency.

According to officials in the Department for Promotion of Industry and Internal Trade (DPIIT), work on putting a framework for devising a logistics cost index is in the final stages and set for release very soon.

Under the initiative, multiple indexed data will be provided to capture product-wise as well as region-wide logistics cost movement on a forthrightly or monthly basis on the lines of WPI and CPI, the officials quoted above said.

In addition to the logistics cost index, an annual, all-encompassing, national logistics cost data based on Indian systems will also be brought out by DPIIT to provide a truer picture of costs involved in moving goods and services across the country.

“The artificial neural network method that is a system used globally to determine logistics cost relies largely on international data sets of things coming from outside or business trying to happen with India and things that move out from here. So, international estimates on logistics cost in India is largely based on cost of moving in and out of trading ports in the country that is determined by global shipping lines" said Surendra Ahirwar, joint secretary, DPIIT.

“It is here that determination of logistics cost based on Indian system and involving actual cost within the country will bring out a truer estimates on this critical data that has wide scale ramifications. The cost indexes will further strengthen estimates on logistics," he added.

“We will soon have a consultation meeting with experts from industry, academic and government on domestic logistics cost index. There is a internal cost and a domestic cost. Much of the transportation cost by the shipping lines and they are not in any sovereign control."

India’s logistics sector is largely unorganized and fragmented, which is why the country’s logistics costs as per external estimates are as high as 14-15% of GDP, against 7-8% in developed nations such as the Singapore and the US, which leverage it to boost exports. The National Logistics Policy (NLP) launched in September aims to bring down logistics costs and address logistical challenges. The NLP aims to bring down India’s logistics cost to 8% in the next five years.

Due to the fragmented logistics in the country, about 16% of India’s agri-production is wasted at different stages of the supply chain and the new policy seeks to limit losses incurred while transporting perishable commodities to under 5% by improving the warehouse facilities and cold chain efficiency.

The PM GatiShakti National Master Plan, aimed at bringing logistics costs on a par with developed nations, would save the government 10 trillion annually, commerce and industry minister Piyush Goyal has said.


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