India’s long-standing logistics inefficiency—often cited as a structural drag on manufacturing competitiveness—appears to be easing meaningfully. Union Road Transport and Highways Minister Nitin Gadkari has indicated that the country’s logistics cost has now declined to single digits, marking a significant improvement from historically elevated levels.

Speaking at the BME Conclave 2026, the minister referenced a study conducted by leading academic institutions including IIT Chennai, IIT Kanpur, and IIM Bangalore, which estimated that logistics costs had already fallen to around 10 percent of GDP from 16 percent earlier. He further stated that subsequent improvements have brought this figure down to approximately 9 percent.

This shift is largely attributed to India’s aggressive push on infrastructure development over the past decade, particularly the expansion of national highways, expressways, and economic corridors. The government’s strategy has focused on reducing transit time, improving connectivity between industrial clusters and ports, and lowering fuel and handling inefficiencies key contributors to high logistics costs.

The implications of this decline are structurally important. Logistics costs in India have traditionally been significantly higher than global peers, eroding the competitiveness of Indian exports. With the revised estimate of around 9 percent, India now compares favorably with China, where logistics costs range between 8–10 percent, and performs better than developed markets such as the United States and Europe, where costs hover around 12 percent.

From a trade perspective, lower logistics costs directly improve price competitiveness in global markets. Export-oriented sectors such as engineering goods, textiles, chemicals, and auto components stand to benefit from reduced transportation and supply chain expenses. This could also support India’s broader ambition to increase its share in global manufacturing and exports.

Beyond exports, domestic industrial efficiency is also expected to improve. Reduced logistics costs enhance inventory cycles, lower working capital requirements, and improve turnaround times for businesses. For sectors with heavy supply chain dependencies—such as cement, steel, FMCG, and automobiles the gains could be particularly meaningful.

The minister also highlighted developments in India’s automobile sector, noting that the industry has expanded from ₹14 lakh crore to ₹22 lakh crore during his tenure. While this growth reflects broader economic expansion and demand trends, improved logistics infrastructure has played a supporting role by enabling faster distribution and reducing supply chain bottlenecks.

At a global level, India’s automobile sector still trails significantly behind the United States and China in scale. However, the combination of infrastructure improvements and policy support could help narrow this gap over time, particularly if export competitiveness improves in tandem with cost efficiencies.

Policy signals from the government also suggest a parallel focus on sustainability within the logistics ecosystem. The minister emphasized the need to promote biofuels and alternative energy sources, particularly in light of recent global fuel supply disruptions linked to geopolitical tensions in West Asia. This aligns with India’s broader strategy to reduce import dependence on fossil fuels and mitigate energy-related vulnerabilities.

A notable initiative in this direction is the identification of 10 highway stretches for the deployment of green hydrogen-powered trucks. These corridors are expected to be supported by hydrogen refueling infrastructure developed by state and private energy players. While still at an early stage, such initiatives indicate a longer-term transition toward cleaner logistics systems.

For India, the convergence of lower logistics costs and a gradual shift toward sustainable transport solutions represents a dual advantage enhancing both economic competitiveness and environmental outcomes.