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DPIIT and NCAER sign MoU for framework and assessment of logistics cost in India

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NEW DELHI : The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, and the National Council of Applied Economic Research (NCAER) signed a Memorandum of Understanding (MoU) on Friday here,to develop a framework for assessing logistics costs in India. The MoU was signed by Dr. Anil Sharma, Secretary and Operations Director of NCAER, and Dr. S K Ahirwar, Joint Secretary of DPIIT. The event was graced by Shri Rajesh Kumar Singh, Secretary of DPIIT.

The key deliverables of the MoU include :-

Developing a detailed framework for assessing logistics costs in the country.

Conducting a comprehensive study to assess logistics costs for the year 2023-24.

Evaluating differentials in logistics costs across various routes, modes, products, types of cargo, and service operations.

Identifying major determinants influencing logistics costs in different sectors.

Shri Rajesh Kumar Singh emphasized the importance of data-based evaluation of logistics costs. The seminar featured a panel discussion with senior government officers from DPIIT and GSTN, representatives from multilateral institutions, industry professionals, and academicians.

During an open discussion with logistics sector stakeholders and industry associations, the response was highly encouraging. Suggestions included identifying high-value and high-volume commodities/products for the study and considering intangible and indirect elements of logistics costs, such as delays and the convenience of establishing businesses from an investor’s perspective.

NCAER is expected to conduct a detailed study and submit the report within a year. This study is anticipated to have significant impacts on India’s logistics sector.

The Government of India launched the National Logistics Policy (NLP) on September 17, 2022, aiming to reduce the percentage of logistics costs to GDP. In line with this, DPIIT’s Logistics Division had earlier launched a report titled “Logistics Cost in India: Assessment and Long-term Framework” in December 2023. Prepared by NCAER, the report provided a baseline aggregated logistics cost estimate and a framework for long-term logistics cost calculation.

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 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. 

Regular assessment and monitoring of logistics costs are crucial for benefiting both the industry and policymakers. This process involves analyzing data on trade flows, product types, industry trends, and origin-destination pairs. In addition to conducting detailed secondary surveys, an institutionalized framework for systematic and periodic data collection is necessary.

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