The Goods and Services Tax (GST) has had a significant impact on reducing the country’s logistics costs, according to the Economic Survey released on Monday. The implementation of the ‘One Nation, One Tax’ system has eliminated the need for trucks to wait for extended periods at state borders, resulting in a 30% reduction in travel time.
As a result, the logistics cost has decreased and the average distance traveled by trucks has increased from 225 km before GST to 300-325 km. This has greatly contributed to improving the ease of doing business and fostering manufacturing growth in the country.
A study by the National Council of Applied Economic Research (NCAER) in December of last year revealed that the logistics cost in the economy has decreased by 0.8 to 0.9 percentage points of GDP between FY14 and FY22. India’s ranking in the World Bank’s Logistics Performance Index (LPI) has risen from 44th place in 2018 to 38th place in 2023 out of 139 countries. This improvement is largely credited to reduced logistics costs and enhanced trade facilitation.
The introduction of cargo tracking has significantly reduced dwell time at the eastern port of Visakhapatnam from 32.4 days in 2015 to 5.3 days in 2019.
Furthermore, India’s ranking in international shipments rose to 22 in 2023 from 44 in 2018 due to its modernization and digitalization efforts.
The country has moved up five places in infrastructure score and four places to 48 in logistics competence and quality. India’s goal is to be among the top 25 countries on the LPI by 2030.