India's logistics sector is on track to become a far larger and more efficient pillar of the economy, with the market potentially reaching $600 billion by 2031-32 and logistics costs easing to about 8% of GDP, a senior official from the Department for Promotion of Industry and Internal Trade said on Tuesday.
The estimate reflects a broader policy push to reduce the friction that has long raised the cost of moving goods across India's vast geography. Logistics has already become central to the country's industrial expansion, contributing more than 13% to GDP and serving as a critical enabler of manufacturing growth, especially as companies seek faster turnaround times, lower inventory burdens and more reliable supply chains.
Cost Curve Reset
The official's projection signals a structural shift in how India is approaching freight movement, warehousing, multimodal connectivity and digital coordination across the supply chain. For years, logistics costs in India have been viewed as a drag on competitiveness, especially when compared with more mature manufacturing economies. A reduction toward 8% of GDP would mark a meaningful improvement, though the figure still leaves room for further efficiency gains over the longer term.
The expected decline is likely to be driven by a combination of infrastructure upgrades, better integration across transport modes and the gradual formalisation of logistics services. India has invested heavily in highways, rail freight corridors, ports, inland waterways and warehousing networks, while policy reforms have aimed to reduce bottlenecks at state and national levels. The government has also been pushing digitisation in logistics, including systems that improve visibility, tracking and coordination across shipments.
For manufacturers, the implications are significant. Lower logistics costs can translate into more competitive pricing, improved export readiness and better margins, particularly in sectors where transport and storage account for a large share of total costs. This is especially relevant for industries such as automobiles, electronics, pharmaceuticals, consumer goods and industrial machinery, where supply-chain precision can shape investment decisions.
Manufacturing Multiplier
The logistics sector's role in supporting manufacturing has become more visible as India seeks to deepen its industrial base and attract global supply-chain diversification. As companies reassess sourcing and production strategies, the ability to move inputs and finished goods efficiently is increasingly a deciding factor. A stronger logistics ecosystem can therefore act as a multiplier for manufacturing output, rather than merely a back-end support function.
The projected $600 billion market size by 2031-32 also points to the scale of opportunity for private investment. Warehousing operators, freight aggregators, third-party logistics firms, cold-chain providers and technology platforms are all positioned to benefit if the sector continues to formalise and expand. At the same time, the opportunity is likely to be unevenly distributed, with gains concentrated among firms able to leverage scale, technology and network integration.
India's logistics challenge is not only about cost, but also about predictability. Delays, fragmented documentation, inconsistent last-mile connectivity and uneven infrastructure quality have historically raised uncertainty for businesses. Reducing these frictions can have an outsized impact on productivity, because even small improvements in transit time and inventory management can generate large savings across a national economy of India's size.
Policy And Scale
The latest projection also fits into the government's wider macroeconomic strategy, which has increasingly treated logistics as a core competitiveness issue rather than a narrow transport concern. By lowering logistics costs and improving efficiency, policymakers aim to reinforce India's manufacturing ambitions, support exports and make domestic production more globally competitive.
The path to an 8% of GDP logistics cost structure will depend on sustained execution. Infrastructure spending alone will not be enough unless it is matched by regulatory simplification, better inter-agency coordination and wider adoption of digital tools across the supply chain. The sector's future growth will also depend on whether smaller operators can be brought into a more organised ecosystem without losing flexibility or pricing competitiveness.
Still, the direction of travel is clear. With logistics already accounting for a substantial share of economic activity and playing a pivotal role in manufacturing growth, the sector is emerging as one of the most important levers in India's next phase of industrial expansion. If the projected trajectory holds, logistics could shift from being a cost burden to a strategic advantage for the economy by the early 2030s.