{"id":8802,"date":"2026-06-25T14:49:04","date_gmt":"2026-06-25T09:19:04","guid":{"rendered":"https:\/\/www.entrepreneurindia.co\/blogs\/?p=8802"},"modified":"2026-06-25T14:49:04","modified_gmt":"2026-06-25T09:19:04","slug":"india-logistics-cost-challenges","status":"publish","type":"post","link":"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/","title":{"rendered":"India&#8217;s Logistics Cost Is 13\u201314% of GDP vs the World Average of 8% \u2014 What This Means for Your Factory"},"content":{"rendered":"<p><em>India Logistics Cost Challenges<\/em><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Why_Every_Manufacturer_in_India_Should_Be_Alarmed\" >Why Every Manufacturer in India Should Be Alarmed<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Related_Article_How_to_Set_Up_a_Small_Manufacturing_Unit_in_India_Licences_Steps\" >Related Article: How to Set Up a Small Manufacturing Unit in India: Licences &amp; Steps<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#The_Real_Cost_India_Pays_for_Logistics_Inefficiency\" >The Real Cost India Pays for Logistics Inefficiency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Government_Policies_Trying_to_Change_the_Math\" >Government Policies Trying to Change the Math<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Key_Schemes_Reshaping_Indias_Logistics_Landscape\" >Key Schemes Reshaping India&#8217;s Logistics Landscape<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Business_Ideas_for_Entrepreneurs_Inside_Indias_Logistics_Gap\" >Business Ideas for Entrepreneurs Inside India&#8217;s Logistics Gap<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#1_Third-Party_Logistics_3PL_and_Warehousing_for_Industrial_Goods\" >1. Third-Party Logistics (3PL) and Warehousing for Industrial Goods<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Get_Detailed_Project_Report_DPR_Cold_Chain_Infrastructure_and_Refrigerated_Warehousing\" >Get Detailed Project Report (DPR): Cold Chain Infrastructure and Refrigerated Warehousing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#2_Integrated_Packaging_and_Logistics_Solutions\" >2. Integrated Packaging and Logistics Solutions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Get_Detailed_Insights_from_This_Book_Handbook_on_Modern_Packaging_Industries\" >Get Detailed Insights from This Book: Handbook on Modern Packaging Industries<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#3_Cold_Chain_Infrastructure_for_Agri-Processing_Exporters\" >3. Cold Chain Infrastructure for Agri-Processing Exporters<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Import%E2%80%93Export_Opportunity_Analysis\" >Import\u2013Export Opportunity Analysis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Indian_MSME_Leaders_Who_Turned_Logistics_into_a_Competitive_Edge\" >Indian MSME Leaders Who Turned Logistics into a Competitive Edge<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Mahindra_Logistics_%E2%80%94_From_Captive_to_Commercial\" >Mahindra Logistics \u2014 From Captive to Commercial<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Spoton_Logistics_%E2%80%94_The_SME-Focused_Disruptor\" >Spoton Logistics \u2014 The SME-Focused Disruptor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#TCI_Express_%E2%80%94_The_B2B_Express_Freight_Specialist\" >TCI Express \u2014 The B2B Express Freight Specialist<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#How_NPCS_Helps_You_Navigate_Logistics_and_Industrial_Project_Feasibility\" >How NPCS Helps You Navigate Logistics and Industrial Project Feasibility<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Build_a_profitable_business_with_the_right_idea\" >Build a profitable business with the right idea<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Indias_Logistics_Cost_Gap_A_Comparative_Snapshot\" >India&#8217;s Logistics Cost Gap: A Comparative Snapshot<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Frequently_Asked_Questions_FAQs\" >Frequently Asked Questions (FAQs)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/www.entrepreneurindia.co\/blogs\/india-logistics-cost-challenges\/#Conclusion_The_Logistics_Gap_Is_a_Problem_%E2%80%94_and_a_Significant_Opportunity\" >Conclusion: The Logistics Gap Is a Problem \u2014 and a Significant Opportunity<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Why_Every_Manufacturer_in_India_Should_Be_Alarmed\"><\/span><strong>Why Every Manufacturer in India Should Be Alarmed<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Here comes the one cost factor that should put every factory owner on his toes: In India, logistics costs have been calculated at 13-14 per cent of GDP. The world average is 8 percent. So that difference, five-six per cent, comes to hundreds of billions of rupees taken in secret from the manufacturing economy each year. Inefficiency is no abstract policy problem for those who are interested in exploring new business avenues related to logistics, as well as for those who simply look for a competitive plant. It&#8217;s a direct impact on your business margins, competitiveness in the export market and survival.<\/p>\n<p>The <a href=\"https:\/\/www.worldbank.org\/en\/topic\/transport\/brief\/logistics-performance-index\" target=\"_blank\" rel=\"noopener\">World Bank<\/a> consistently places India is always ranked in the middle of its Logistics Performance Index (LPI), trailing even other Asian countries such as China and Vietnam. In the meantime, India&#8217;s aspiration to emerge as a global manufacturing centre is gaining momentum. Both these realities create tension that every investor, MSME owner, and industrial entrepreneur must be aware of before signing the lease of a factory shed.<\/p>\n<h3 class=\"wp-block-heading has-text-align-center\" style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Related_Article_How_to_Set_Up_a_Small_Manufacturing_Unit_in_India_Licences_Steps\"><\/span>Related Article: <a href=\"https:\/\/www.niir.org\/blog\/set-up-a-small-manufacturing-unit\/\" target=\"_blank\" rel=\"noopener\">How to Set Up a Small Manufacturing Unit in India: Licences &amp; Steps<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h2><span class=\"ez-toc-section\" id=\"The_Real_Cost_India_Pays_for_Logistics_Inefficiency\"><\/span><strong>The Real Cost India Pays for Logistics Inefficiency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Logistics cost is really just the cost of transportation, warehousing, inventory carrying and allied overheads that are built into each product that travels from plant to customer. This is 8 percent of GDP or less in a healthy economy. Germany gets approximately 8 percent. The U.S. is running at under 8 percent. China&#8217;s ratio has continued to decrease since its double-digit figure to about 14 percent today and still continues to drop. In contrast, India is structurally paralyzed.<\/p>\n<p>The additional cost to Indian manufacturers as compared to their counterparts around the world amounts to a number of lakh crores across the economy, according to the <a href=\"https:\/\/commerce.gov.in\/\" target=\"_blank\" rel=\"noopener\">Ministry of Commerce and Industry<\/a>. This inefficiency can silently cost an individual manufacturer an additional \u20b950 to \u20b980 lakh annually, when compared to the same manufacture from China or Malaysia, with a similar annual turnover. That&#8217;s no rounding error. It&#8217;s the difference between a high profit plant and a plant that&#8217;s not up to scratch.<\/p>\n<p>Structural causes. In addition to this, the supply chain has additional costs including poor road connectivity to industrial clusters, fragmented cold chain infrastructure, poor warehousing near ports and complex regulatory compliance environment. Moreover, the transport mix in India is still heavily weighted in favor of road transport \u2013 more than 60 percent of freight is transported by road \u2013 and the utilization of rail, coastal shipping and inland waterways is limited. Road transport is less efficient, more fuel using and more likely to be delayed and damaged.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Government_Policies_Trying_to_Change_the_Math\"><\/span><strong>Government Policies Trying to Change the Math<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>This structural lacuna is recognised by the Government of India and various targeted interventions have been undertaken. PM Gati Shakti National Master Plan is the most impactful \u2014 a plan aimed at integrating the development of roads, rails, airways and waterways under one framework for investment of \u20b9100 lakh crore in infrastructure. The plan seeks to lower logistics cost to less than 8 percent of GDP, specifically against global norms.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Key_Schemes_Reshaping_Indias_Logistics_Landscape\"><\/span><strong>Key Schemes Reshaping India&#8217;s Logistics Landscape<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The National Logistics Policy (NLP) is India&#8217;s first-ever specific logistics policy, introduced by the Ministry of Commerce. It focuses on multi modal transportation, a Unified Logistics Interface Platform (ULIP) and digital integration of ease of doing business. For manufacturers, it involves quicker customs clearance, real-time tracking of shipments and reduced dwell time at port and rail facilities.<\/p>\n<p>The Production Linked Incentive (PLI) scheme in 14 sectors in an implicit manner relies on logistics efficiency (as PLI incentives are linked to incremental production). The PLI advantage will be slightly offset for a factory with high logistics cost. This means logistics optimisation is not only a cost consideration but an essential requirement to maximise PLI returns.<\/p>\n<p>The <a href=\"https:\/\/msme.gov.in\/\" target=\"_blank\" rel=\"noopener\">Ministry of MSME<\/a> has launched cluster development programmes and common facility centres, which help small manufacturers cut down on logistics costs by providing shared warehousing, joint procurement of freight, and coordination of dispatch. For any MSME that has started its business today, the proximity to a cluster designated by the Ministry can save logistics expenses by 15-25 per cent per unit basis. Proximity to a MSME cluster designated by the Ministry can save logistics expenses by 15-25 per cent per unit basis for any MSME that has started its business today.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Business_Ideas_for_Entrepreneurs_Inside_Indias_Logistics_Gap\"><\/span><strong>Business Ideas for Entrepreneurs Inside India&#8217;s Logistics Gap<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_Third-Party_Logistics_3PL_and_Warehousing_for_Industrial_Goods\"><\/span><strong>1. Third-Party Logistics (3PL) and Warehousing for Industrial Goods<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Among the leading business ventures that have sprung from the logistical void in India is industrial 3PL. Most small to mid-sized manufactures do not have the budget for warehouses and distribution centers. They are heavily dependent on spot-market trucking and are plagued by cost and delivery uncertainties. The 3PL that&#8217;s managed, whether it&#8217;s a temperature-controlled warehouse or ambient, handles a real market pain point, with last-mile delivery and freight audit services. Capital investment required to establish an industrial warehouse of 5,000 to 10,000 sq ft in Tier-2 City ranges from \u20b91.5 cr to \u20b93 cr for basic racking, handling equipment and software integration system. Revenue from the warehousing business will easily be able to be maintained at around \u20b980 &#8211; \u20b9120 lakh per annum at moderate utilisation with value added services. This is a very interesting option for entrepreneurs who are keen to be located near the industrial corridors such as Delhi-Mumbai Industrial corridor (DMIC), Pune-Nashik and Coimbatore.<\/p>\n<h3 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Get_Detailed_Project_Report_DPR_Cold_Chain_Infrastructure_and_Refrigerated_Warehousing\"><\/span>Get Detailed Project Report (DPR):<a href=\"https:\/\/www.niir.org\/profile-projects-reports\/profiles\/cold-storage-controlled-atmosphere-storage-multipurpose-multi-commodity-cold-storage-food-vegetables-fruits-storage-refrigerated-warehousing-cold-chain-industrial-cold-rooms-warehouse-rural-godowns-for-short-term-long-term-storage\/z,,7f,0,a\/index.html\" target=\"_blank\" rel=\"noopener\"> Cold Chain Infrastructure and Refrigerated Warehousing<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<figure id=\"attachment_8804\" aria-describedby=\"caption-attachment-8804\" style=\"width: 1200px\" class=\"wp-caption alignnone\"><img fetchpriority=\"high\" decoding=\"async\" class=\"size-full wp-image-8804\" src=\"https:\/\/www.entrepreneurindia.co\/blogs\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-25T144505.805.jpg\" alt=\"India logistics cost challenges showing supply chain inefficiency, transport delays, and manufacturing impact in India\" width=\"1200\" height=\"1800\" srcset=\"https:\/\/www.entrepreneurindia.co\/blogs\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-25T144505.805.jpg 1200w, https:\/\/www.entrepreneurindia.co\/blogs\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-25T144505.805-200x300.jpg 200w, https:\/\/www.entrepreneurindia.co\/blogs\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-25T144505.805-683x1024.jpg 683w, https:\/\/www.entrepreneurindia.co\/blogs\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-25T144505.805-768x1152.jpg 768w, https:\/\/www.entrepreneurindia.co\/blogs\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-25T144505.805-1024x1536.jpg 1024w, https:\/\/www.entrepreneurindia.co\/blogs\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-25T144505.805-150x225.jpg 150w, https:\/\/www.entrepreneurindia.co\/blogs\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-25T144505.805-750x1125.jpg 750w, https:\/\/www.entrepreneurindia.co\/blogs\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-25T144505.805-1140x1710.jpg 1140w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-8804\" class=\"wp-caption-text\">India\u2019s high logistics cost is increasing manufacturing expenses and affecting supply chain efficiency across industries.<\/figcaption><\/figure>\n<h3><span class=\"ez-toc-section\" id=\"2_Integrated_Packaging_and_Logistics_Solutions\"><\/span><strong>2. Integrated Packaging and Logistics Solutions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Industrial packaging is a neglected and under invested sector in Indian industry. Unfavourable packaging contributes to damage, transit claims and return logistics costs, adding to the high logistics cost. One business person that provides packaging design, standardisation of palletisation and logistics coordination in a single roof is welcome. This type of model is suitable for areas relatively close to automobile parts manufacturing, pharmaceutical industries and engineering goods exporting industries. It has moderate setup costs (of the equipment, workspace and staff: \u20b980 lakh to \u20b91.5 crore), and recurring service contracts with even five to ten anchor clients can fetch \u20b960 lakh to \u20b990 lakh per annum. This business concept also translates into the supply chain consulting for big clients.<\/p>\n<h3 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Get_Detailed_Insights_from_This_Book_Handbook_on_Modern_Packaging_Industries\"><\/span>Get Detailed Insights from This Book: <a href=\"https:\/\/www.niir.org\/books\/book\/handbook-on-modern-packaging-industries-2nd-revised-edition\/isbn-9788178330860\/zb,,48,a,0,0,a\/index.html\" target=\"_blank\" rel=\"noopener\">Handbook on Modern Packaging Industries<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h3><span class=\"ez-toc-section\" id=\"3_Cold_Chain_Infrastructure_for_Agri-Processing_Exporters\"><\/span><strong>3. Cold Chain Infrastructure for Agri-Processing Exporters<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Cold chain gaps result in loss of a substantial proportion of the perishable produce in India on an annual basis. The other, lesser talked about side to the cold chain challenge is the effects of cold chain failures on the agri-processing manufacturers\u2014the companies that produce frozen foods, dairy products, pharmaceutical intermediates and specialty chemicals. A cold chain logistics business with a combination of pre-cooling chambers, refrigerated transportation, and humidity-controlled storage facilities requires an investment of \u20b93 crore to \u20b95 crore and can cater to various client businesses. There are Capital Subsidies provided by the <a href=\"https:\/\/nhb.gov.in\/\" target=\"_blank\" rel=\"noopener\">National Horticulture Board <\/a>and Agricultural and Processed Food Products Export Development Authority (APEDA) which cuts the investment by 20 to 35 per cent.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Import%E2%80%93Export_Opportunity_Analysis\"><\/span><strong>Import\u2013Export Opportunity Analysis<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>India&#8217;s high logistics costs is also a prism to view India&#8217;s export competitiveness\u2014and opportunity. As revealed by <a href=\"https:\/\/dgft.gov.in\/\" target=\"_blank\" rel=\"noopener\">Directorate General of Foreign Trade (DGFT)<\/a>, India&#8217;s export contribution to global trade is still much less than what it can achieve and logistics-related hassles have been consistently reported as a discouragement in exporter surveys. The same applies to those who help exporters with logistics issues, who are entering a lucrative niche service by solving their problem.<\/p>\n<p>Freight forwarders and customs clearance firms that specialize in particular industries, such as pharmaceuticals, engineering products, auto-components etc., enjoy high margins since the exporters are willing to pay more for their reliability. Also, with the transition towards multi-modal logistics (road to rail transshipment, port consolidation), specialised logistics management companies are coming into the picture that are able to handle ULIP platforms and monitor shipments across the modes, and ensure compliance. The NLP ecosystem will be maturing enough to make it realistic to see exports logistics businesses grow by 30-40 per cent per year.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Indian_MSME_Leaders_Who_Turned_Logistics_into_a_Competitive_Edge\"><\/span><strong>Indian MSME Leaders Who Turned Logistics into a Competitive Edge<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Mahindra_Logistics_%E2%80%94_From_Captive_to_Commercial\"><\/span><strong>Mahindra Logistics \u2014 From Captive to Commercial<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>One of the most teachable lessons for industrial entrepreneurs is from Mahindra Logistics, which came out of the in-house logistics arm of Mahindra &amp; Mahindra Limited. Founder logic: if you already have many complex supply chains for your own manufacturing, you have proprietary skills that outside clients will pay for. The company&#8217;s brand was in integrated supply chain management, not trucking. Having invested in technology platforms early, and ahead of the time, Mahindra Logistics had a scalable advantage over its asset-rich brethren. The lesson for new entrepreneurs is that it is not about the number of trucks that you own, but about the process and technology.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Spoton_Logistics_%E2%80%94_The_SME-Focused_Disruptor\"><\/span><strong>Spoton Logistics \u2014 The SME-Focused Disruptor<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>By forming the Spoton Logistics, Ajesh Kapila had identified a niche to cater to the needs of SME manufacturers, which were being neglected on a systematic basis by the big freight companies primarily dealing with enterprise customers. The company has found its strength by providing &#8220;real-time visibility&#8221; and &#8220;transparent, reliable pricing&#8221; which are fundamental features that SME shippers had been lacking for years. The journey of Spoton highlights that MSMEs represent a huge opportunity in the Indian Logistics market, and not just a consolation prize for low-margin. Business owners who are transparent, communicative and consistent with their SME customers can create long-term cash flowing businesses in this niche.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"TCI_Express_%E2%80%94_The_B2B_Express_Freight_Specialist\"><\/span><strong>TCI Express \u2014 The B2B Express Freight Specialist<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Transport Corporation of India group (TCI) found a niche in the premium B2B express freight market amidst a price war among most logistics\u2019 companies. The firm built out time-sensitive hub-and-spoke systems and specialized facilities for time-sensitive industrial deliveries, such as parts, spare parts, samples, etc., that require reliable delivery. The takeaway is on segmentation \u2013 the logistics market in India is not one size fits all. A company that specializes in a particular lane, type of freight or vertical can produce much higher margins for itself than an operator in a more general business.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_NPCS_Helps_You_Navigate_Logistics_and_Industrial_Project_Feasibility\"><\/span><strong>How NPCS Helps You Navigate Logistics and Industrial Project Feasibility<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>We at Niir Project Consultancy Services (NPCS) interact directly with the entrepreneurs, MSME promoters and industrial investors who are at the decision-making stage of establishing their new businesses or expanding their existing businesses. Market Survey cum Detailed Techno-Economic Feasibility Reports (DPRs) can be prepared covering the entire project canvas such as manufacturing processes, market demand analysis, process flow diagrams, product mix and capacity planning, machinery specifications, raw material sourcing and complete project financials with profitability projections. In logistics dependent industries such as 13-14% GDP dependent, our feasibility studies specifically map out logistics cost scenarios so that promoters can have a realistic view prior to investment. We aim to make it simple for you to assess feasibility, profitability, and scalability in the long-term before you invest.<\/p>\n<h3 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Build_a_profitable_business_with_the_right_idea\"><\/span><a href=\"https:\/\/www.niir.org\/startup-selector\" target=\"_blank\" rel=\"noopener\">Build a profitable business with the right idea<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h2><span class=\"ez-toc-section\" id=\"Indias_Logistics_Cost_Gap_A_Comparative_Snapshot\"><\/span><strong>India&#8217;s Logistics Cost Gap: A Comparative Snapshot<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<tbody>\n<tr>\n<td><strong>Parameter<\/strong><\/td>\n<td><strong>India<\/strong><\/td>\n<td><strong>China<\/strong><\/td>\n<td><strong>USA<\/strong><\/td>\n<td><strong>Germany<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Logistics Cost (% of GDP)<\/td>\n<td>13\u201314%<\/td>\n<td>~14% (declining)<\/td>\n<td>~7.7%<\/td>\n<td>~8%<\/td>\n<\/tr>\n<tr>\n<td>Road Freight Share<\/td>\n<td>&gt;60%<\/td>\n<td>~74%<\/td>\n<td>~43%<\/td>\n<td>~71%<\/td>\n<\/tr>\n<tr>\n<td>Rail Freight Share<\/td>\n<td>~26%<\/td>\n<td>~17%<\/td>\n<td>~40%<\/td>\n<td>~17%<\/td>\n<\/tr>\n<tr>\n<td>No. of Warehouses (est.)<\/td>\n<td>~9,400<\/td>\n<td>&gt;1,50,000<\/td>\n<td>&gt;18,000<\/td>\n<td>&gt;14,000<\/td>\n<\/tr>\n<tr>\n<td>Key Logistics Policy<\/td>\n<td>NLP + GatiShakti<\/td>\n<td>Belt &amp; Road Integration<\/td>\n<td>STB\/DOT Framework<\/td>\n<td>EU Single Market<\/td>\n<\/tr>\n<tr>\n<td>Avg. Dwell Time at Ports<\/td>\n<td>~4\u20136 days<\/td>\n<td>~1\u20132 days<\/td>\n<td>~1 day<\/td>\n<td>~1\u20132 days<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><em>Sources: World Bank LPI, Ministry of Commerce (India), National Logistics Policy Document, industry estimates.<\/em><\/p>\n<div class=\"jeg_video_container jeg_video_content\"><iframe title=\"35 Project Profiles for Entrepreneurs | Business Investment Opportunities.\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/cltVsS32pMw?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_FAQs\"><\/span><strong>Frequently Asked Questions (FAQs)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>Q1. Why is India&#8217;s logistics cost so much higher than the global average?<\/strong><\/p>\n<p>India\u2019s high logistics costs stem from heavy dependency on road transport, poor integration of modes, lack of quality warehousing capacity at industrial hubs, significant compliance requirements, fragmentation, and dependence on millions of small truckers that lead to loss of economies of scale. Several steps-GatiShakti, NLP, modernization of ports-being taken by the government require time to take effect.<\/p>\n<p><strong>Q2. How does high logistics cost affect my manufacturing margins directly?<\/strong><\/p>\n<p>High logistics cost raises your input costs (raw materials arrive more expensively), increases your distribution spend (finished goods cost more to ship), and raises inventory carrying costs (because unreliable transit times force you to hold larger buffer stock). Together, these can add 5 to 8 percent to your cost of goods sold compared to a factory operating in a country with efficient logistics.<\/p>\n<p><strong>Q3. Which government scheme is most relevant for manufacturers trying to cut logistics costs?<\/strong><\/p>\n<p>This will be facilitated through National Logistics Policy (NLP) and PM GatiShakti. From an operational standpoint, the cluster-based development programs under Ministry of MSME could help the MSMEs to leverage on a shared logistics ecosystem through shared warehouse, shared fleet\/ freight pooling. While setting up a cold-chain, or an agri-logistics business, there are capital subsidies, at direct levels, from APEDA &amp; the National Horticulture Board.<\/p>\n<p><strong>Q4. Is logistics a good business idea for a first-generation entrepreneur in India?<\/strong><\/p>\n<p>Yes \u2014 but with important caveats. Generalised trucking is highly competitive and margin-thin. However, specialised logistics \u2014 cold chain, industrial 3PL, export freight management, packaging-plus-logistics \u2014 are areas where technology adoption, reliability, and sector focus can generate strong returns. The NLP ecosystem is creating new demand for organised logistics players, and the market is large enough for well-positioned entrants to build significant businesses.<\/p>\n<p><strong>Q5. What is the PM GatiShakti plan, and how does it help factory owners?<\/strong><\/p>\n<p>PM GatiShakti &#8211; A \u20b9100 lakh crore National Master Plan to integrate all the developmental projects involving Roads, Railways, airports, ports, mass transportation, waterways and logistics in single digital platform. The implication for factory owners is that they get easier access to the industrial zones via improved road networks, increased connectivity via integrated multimodal logistics parks closer to their production units and decrease in turnaround time as new assets are added and becomes functional with the rollout of the project. The structural issue behind the high costs of logistics in the country is being addressed through this policy document.<\/p>\n<p><strong>Q6. How can a feasibility report help me plan a logistics or manufacturing project?<\/strong><\/p>\n<p>Our feasibility report generates a bespoke model based on the location of your product type in each potential market. The report estimates revenues, margins and payback period against realistic cost-emptions, including those for logistics. This protects you against post investment surprises and ensures that investment decision with regard to factory location, warehouse locations, and the overall distribution model, are as informed as possible prior to capital expenditure.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion_The_Logistics_Gap_Is_a_Problem_%E2%80%94_and_a_Significant_Opportunity\"><\/span><strong>Conclusion: The Logistics Gap Is a Problem \u2014 and a Significant Opportunity<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The logistics-to-GDP ratio of 13-14 percent in India is both a competitive disadvantage as well as a market signal. It requires existing manufacturers to be more focused on optimisation of their supply chains, both in terms of location strategy and choice of modal transport and logistics partners. To entrepreneurs, it signals an area of business opportunities in the 3PL, cold chain, packaging and export freight logistics segments where they can establish profitable businesses with proper organisation and technology.<\/p>\n<p>Policy conditions are better than at any time before. The slogans of NLP and Gati Shakti are not mere catchphrases, but are a true project of infrastructural investment that will alter the cost structures in the next decade. So, as a manufacturer and investor, it&#8217;s your choice whether you&#8217;re a part of the system that will benefit from these changes \u2013 or whether you&#8217;re still bearing the brunt of the old, inefficient system.<\/p>\n<p>The logistics deficit will be reduced in India. The smart way to do business is to do it before that happens \u2014 either by minimizing your exposure to logistics inefficiency, or by creating a business that will serve manufacturers who are going to have to do just that. If you need more information on feasibility, project planning or sector analysis, please ask for a detailed Techno-Economic Feasibility Report specific to your project from NPCS.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>India Logistics Cost Challenges Why Every Manufacturer in India Should Be Alarmed Here comes the one cost factor that should put every factory owner on his toes: In India, logistics costs have been calculated at 13-14 per cent of GDP. The world average is 8 percent. So that difference, five-six per cent, comes to hundreds [&hellip;]<\/p>\n","protected":false},"author":16,"featured_media":8803,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":{"subtitle":"","format":"standard","override":[{"template":"2","parallax":"1","fullscreen":"1","layout":"right-sidebar","sidebar":"default-sidebar","second_sidebar":"default-sidebar","sticky_sidebar":"1","share_position":"topbottom","share_float_style":"share-monocrhome","show_share_counter":"1","show_view_counter":"1","show_featured":"1","show_post_meta":"1","show_post_author":"1","post_date_format":"default","post_date_format_custom":"Y\/m\/d","show_post_category":"1","show_post_reading_time":"0","post_reading_time_wpm":"300","post_calculate_word_method":"str_word_count","show_zoom_button":"0","zoom_button_out_step":"2","zoom_button_in_step":"3","show_post_tag":"1","show_prev_next_post":"1","show_popup_post":"1","show_comment_section":"1","number_popup_post":"1","show_author_box":"1","show_post_related":"0","show_inline_post_related":"0"}],"image_override":[{"single_post_thumbnail_size":"crop-500","single_post_gallery_size":"crop-500"}],"trending_post_position":"meta","trending_post_label":"Trending","sponsored_post_label":"Sponsored by","disable_ad":"0"},"jnews_primary_category":[],"jnews_social_meta":[],"jnews_paywall_metabox":{"paragraph_limit":"2","enable_premium_post":"0","enable_free_post":"0","override_paragraph_limit":"0","enable_preview_post":"0","enable_preview_video":"0"},"jnews_override_counter":{"view_counter_number":"0","share_counter_number":"0","like_counter_number":"0","dislike_counter_number":"0"},"footnotes":""},"categories":[1227,1169,1231],"tags":[2425,2424,2428,2427,2423,2426],"class_list":["post-8802","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government-schemes-policies","category-market-research-trends","category-msme-small-scale-industries","tag-high-logistics-cost-in-india","tag-india-logistics-cost-gdp","tag-india-logistics-industry-analysis","tag-india-logistics-performance-index","tag-logistics-cost-in-india","tag-logistics-cost-percentage-india"],"_links":{"self":[{"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/posts\/8802","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/comments?post=8802"}],"version-history":[{"count":1,"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/posts\/8802\/revisions"}],"predecessor-version":[{"id":8805,"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/posts\/8802\/revisions\/8805"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/media\/8803"}],"wp:attachment":[{"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/media?parent=8802"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/categories?post=8802"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.entrepreneurindia.co\/blogs\/wp-json\/wp\/v2\/tags?post=8802"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}