Why Is India Targeting a 9% Logistics Cost by December?
Nitin Gadkari’s Push to Make Logistics More Competitive
Union Minister Nitin Gadkari has reaffirmed the government’s focus on reducing logistics costs to 9% of GDP by December. This would mark another major milestone after successfully cutting logistics costs from 16% to 10% in recent years through expressway expansion and the creation of dedicated economic corridors.
The ongoing transformation is expected to enhance trade efficiency, improve supply chain competitiveness, and strengthen India’s position as a global manufacturing hub. A reduction in logistics cost directly improves corporate margins, benefiting companies in transportation, warehousing, and supply chain management.
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Policy Impact on Logistics and Transport Sector
📈 The government’s target aligns with India’s ambition to reach developed-nation efficiency levels in logistics. Lowering logistics costs helps in increasing export competitiveness and reducing inflationary pressure caused by high freight charges.
💡 According to industry experts, each 1% reduction in logistics cost adds nearly $50 billion to India’s GDP potential. The key enablers include better road connectivity, integrated multimodal transport systems, digitization of logistics chains, and expanded use of technology for real-time tracking.
Sectoral Beneficiaries: Road, Rail, and Warehousing
🚚 Logistics and transport firms are likely to benefit from the reduction in transit times, streamlined toll systems, and expansion of logistics parks. The dedicated freight corridors, Bharatmala and Sagarmala projects are playing a pivotal role in ensuring last-mile connectivity across key industrial zones.
As India’s road network expands to over 1.5 lakh km of expressways, analysts expect strong earnings growth in road construction, transport operators, and 3PL companies. Improved asset utilization and lower fuel consumption will further enhance profitability across the logistics chain.
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India’s Journey Toward Single-Digit Logistics Cost
India’s logistics cost currently stands at around 10% of GDP — higher than developed markets like the U.S. (8%) or Germany (6%). Achieving a 9% target by December would mark a structural improvement, boosting India’s competitiveness in global trade and attracting larger manufacturing investments under the ‘Make in India’ mission.
The continued rollout of expressways, digital freight platforms, and public–private partnerships is likely to accelerate efficiency gains in both the public and private logistics sectors, leading to sustainable cost optimization and improved export margins.
Investor Takeaway
Indian-Share-Tips.com’s Chief Technical Analyst Gulshan Khera, CFP®, who is also a SEBI Registered Investment Adviser, observes that the government’s renewed focus on cutting logistics costs could trigger multi-year growth in infrastructure, road transport, and 3PL stocks. He believes consistent policy execution will remain the key driver for sustained outperformance in logistics-related equities.
Related Queries
How Will Reducing Logistics Cost Impact India’s Export Competitiveness?
What Are the Key Infrastructure Projects Driving Logistics Efficiency?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
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