MoU for Developing detailed framework for assessment of Logistics Cost; Comprehensive study for assessment of logistics cost for 2023-24; and Assessment of differentials in logistics costs

The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry and National Council of Applied Economic Research (NCAER) signed a Memorandum of Understanding (MoU) in New Delhi for the development of Framework & Assessment of Logistics Cost in India. The MoU was signed by Secretary and Operations Director, NCAER, Dr. Anil Sharma and Joint Secretary, DPIIT, Dr S K Ahirwar; the occasion was graced by Secretary, DPIIT, Shri Rajesh Kumar Singh.

The key deliverables of the MoU  are: i) Developing a detailed framework for assessment of Logistics Cost in the country ii) Make a comprehensive study for assessment of logistics cost for year 2023-24. iii) Assessment of differentials in logistics costs across routes, modes, products, types of cargo, and service operations, etc. iv) Identification of major determinants along with influence on the logistics in different sectors, etc.

Shri Rajesh Kumar Singh spoke about the importance of data-based evaluation of our logistics Cost. During the said seminar a panel discussion on this subject was held with the participation from Senior Government officers from DPIIT and GSTN, multilateral institutes, industries, academicians, etc. 

During the open discussion with the logistics sector stakeholders and Industry associations the response was very encouraging and it was suggested that the logistics sector being very diverse in nature, commodities/ products of high value and high volume to be identified for this study purpose. There were also suggestions to look into the intangible and indirect elements of logistics cost which also includes the cost of delay. There was also a view that from an investor perspective for the convenience of establishing business may also be considered as an element affecting the cost. 

This MoU envisages NCAER to conduct the detailed study as above and submit the report within a years’ time.  This study is likely to result in far reaching impacts for the logistics sector in India.  

The Government of India had launched the National Logistics Policy (NLP) on 17th September 2022. One of the primary objectives of the NLP was to reduce the percentage of logistics cost to the GDP. In line with this, Logistics Division, DPIIT had earlier launched a report titled Logistics Cost in India: assessment and long-term framework in December 2023. This report was prepared by NCAER where a baseline aggregated logistics cost estimate and a framework for long term logistics cost calculation was prepared. 

The logistics cost of the country needs to be regularly assessed and monitored such that the data of cost variation will both benefit the industry and the policy makers. This process involves using data of trade flows, product types, industry trends and origin data pairs. In addition to conducting the detailed secondary surveys, this requires an institutionalised framework for the process of data collection in a systematic and periodic manner. 

Memorandum of Understanding on logistics cost assessment establishes a framework and a one year study to analyse cost differentials and determinants. A Memorandum of Understanding between DPIIT and NCAER mandates development of a detailed framework for assessing logistics cost and requires NCAER to prepare a comprehensive 2023-24 logistics cost study, analyse cost differentials across routes, modes, products and operations, identify major determinants including intangible costs, and submit the report within one year, while institutionalising systematic periodic data collection for policymaking.