Pitches for logistics startups in India have long opened with the same line: logistics costs the country 13% to 14% of GDP, twice what developed economies pay. The official number has since changed, and it changes the argument.
What the study found
A study by NCAER for the Department for Promotion of Industry and Internal Trade estimated India's logistics cost in FY24 at 7.97% of GDP, or ₹24.01 lakh crore. It combined secondary data with surveys of more than 500 industry users and 3,000 service providers. An earlier NCAER estimate for FY22 was 7.8% to 8.9%. For comparison the study cites the US at 8.8%, Germany at 8% and Australia at 8.6%.
The 13% to 14% figure was never measured this way, and the new estimate puts India in the same range as advanced economies. For anyone building or investing in logistics, the story of a country paying double is gone.
What the average hides
A national average across every industry says little about any single one. Heavy, low-value goods such as cement, sand and steel spend a far larger share of their value on moving them than electronics or pharmaceuticals do. Construction, the sector I worked in at MCCS Infra and sold to at Equip9, sits at the expensive end, because freight is a large share of the value of what it moves.
The same is true by geography. A corridor between two large cities with good roads and full return loads is cheap per tonne-kilometre. A route into a smaller city, where trucks come back empty, is not.
Where the opportunity moved
If the national number is already reasonable, the opportunity is in specific segments and specific frictions: empty return trips, waiting time at loading points, fragmented truck ownership, and the coordination between the owner of a load and the owner of a vehicle. Those are marketplace and utilisation problems, the same kind I describe in construction equipment rental and in the unit economics of an electric cab fleet.
What I would ask a logistics startup
- Which segment and which corridor, and what logistics costs as a share of the goods moved there.
- Empty running before and after the product, measured in kilometres.
- Utilisation of the trucks or warehouses on the platform.
- Whether the pitch still relies on the 13% to 14% figure.
