India: Govt plans to reduce logistics costs to 9% by year-end

• Logistics cost reduced by 6% so far, shows IIT survey
• Green logistics likely to save fuel costs by up to 60-70%

Union Minister for Road Transport and Highways, Nitin Gadkari, in a comprehensive address at ET Edge SCM Fest 2025, highlighted the government’s plans to bring down India’s logistics cost to 9% by the end of 2025, from the current level of 13-14%. Citing a recent survey by IIT Bangalore, IIT Madras, and IIT Kanpur, he noted a 6% reduction in logistics costs, setting the foundation for further decline.

He emphasised that enhanced infrastructure, multimodal connectivity, and the adoption of alternative fuels are key enablers in reducing logistics costs and boosting India’s export competitiveness. “Every INR 1 invested in infrastructure increases GDP by INR 3.21,” he stated, noting that MSMEs are among the biggest beneficiaries.

He detailed several initiatives, including the construction of high-speed expressways, port connectivity projects, and multimodal logistics parks (MMLPs). Notable developments include the Delhi-Mumbai Expressway, Bharatmala and Sagarmala projects, dry ports in Maharashtra, and container handling enhancements at the Jawaharlal Nehru Port (JNPT). These projects, he said, are already helping reduce turnaround time, fuel consumption, and overall transport costs.

Highlighting technological advancements, the Minister shared that India is moving towards automated toll collection systems, real-time vehicle tracking, and the integration of AI-based crash prevention and monitoring systems. He also announced a significant push towards electric mobility, CNG/LNG, and hydrogen-based transport solutions, including the launch of hydrogen trucks and buses, and fast-charging electric vehicles. The transition, he said, can bring fuel cost savings of up to 60-70%.

The minister also touched upon India’s growing prominence in the automotive sector, revealing that India has now become the third-largest automobile market globally, surpassing Japan. He said companies such as Mercedes-Benz are shifting manufacturing to India to serve global markets, reflecting the country’s rising competitiveness.

Concluding his address, he assured stakeholders of full government support and urged industries to embrace alternative fuels and sustainable logistics practices. “We are the fastest-growing economy, and reducing logistics costs is crucial to increasing exports, generating employment, and realising the Prime Minister’s vision of a $5 trillion economy,” he said.

With these initiatives and a clear roadmap, the government remains confident that logistics costs will drop to a single digit by December 2025, unlocking immense potential for trade and industry.