The Rising Tide of India's Logistics Market: A Journey to Rs 13.4 Trillion by FY28
October 7, 2024, 10:07 pm
Location: India, Maharashtra, Mumbai
Employees: 10001+
Founded date: 1982
Total raised: $2.02B
India's logistics market is on the brink of a revolution. Valued at Rs 9 trillion in FY23, it is projected to swell to Rs 13.4 trillion by FY28. This growth, a robust compounded annual growth rate (CAGR) of 8-9%, is not just a number; it’s a testament to the structural shifts and technological advancements reshaping the landscape.
The National Logistics Policy, introduced in September 2022, is the backbone of this transformation. It aims to streamline logistics by increasing the share of railways in freight movement, currently a mere 18%. The development of dedicated freight corridors (DFCs) is a game-changer. As of April 2024, 96% of these corridors are complete, poised to enhance rail freight capacity and efficiency. This shift is akin to turning a trickle into a torrent, redirecting the flow of goods across the nation.
Road transport dominates the current logistics scene, accounting for 71% of freight movement. This heavy reliance on roads contributes to logistics costs that consume 14% of India’s GDP—far above the 8-9% seen in developed nations. The skewed modal mix is a thorn in the side of efficiency. To combat this, the government has rolled out initiatives like the Goods and Services Tax (GST) and invested heavily in infrastructure. The goal? To align India with global standards, reducing logistics costs to a more manageable 8-9% of GDP.
The logistics sector is a sprawling ecosystem. It encompasses road transport, rail transport, air cargo, multimodal logistics, and industrial warehousing. Each segment plays a crucial role in the overall machinery. The domestic express logistics segment is set to outpace the rest, with a projected 14% CAGR from FY23 to FY28. E-commerce is the wind in its sails, driving demand for faster, more efficient delivery systems.
Organized players currently hold about 80% of the market. Their dominance is expected to grow, bolstered by government policies like the e-way bill and GST. The less-than-truckload (LTL) segment in road transportation is also on the rise, projected to grow at 10% CAGR. This segment caters to the increasing demand for smaller, more frequent shipments, allowing goods to bypass warehouses and reach retailers directly. It’s a shift from bulk to bite-sized logistics.
In parallel, the Delhi government is taking bold steps to clean up its streets. A new incentive scheme offers tax rebates of 10-20% for buyers of new vehicles who scrap their old, polluting ones. This initiative aims to phase out older vehicles, making way for cleaner alternatives. The rebates vary by vehicle type, with a 20% rebate for non-commercial CNG and petrol vehicles, 15% for commercial ones, and 10% for diesel vehicles. It’s a breath of fresh air in a city grappling with pollution.
Meanwhile, Maharashtra is stepping into the future with its ambitious plan for Green Integrated Data Centre Parks. With a projected investment of Rs 1.6 trillion, this initiative positions Maharashtra as a leader in the data center industry. It’s a magnet for multinational corporations and tech giants, enhancing the state’s digital infrastructure. This move is not just about data; it’s about creating a sustainable future.
However, not all is smooth sailing. The Indian government is grappling with safety concerns following the partial collapse of a canopy at Delhi’s Indira Gandhi International Airport. In response, the Central Building Research Institute (CBRI) has been called in to assess and advise on structural safety across airports nationwide. This incident highlights the need for vigilance and adherence to safety standards in infrastructure development.
The logistics market is a living organism, constantly evolving. The interplay of government initiatives, technological advancements, and market demands creates a dynamic environment. As India marches toward its ambitious target, the focus remains on efficiency, sustainability, and safety.
The road ahead is paved with challenges, but the potential is immense. With the right strategies and investments, India can transform its logistics landscape. The journey to Rs 13.4 trillion is not just a destination; it’s a pathway to a more connected, efficient, and sustainable future.
In conclusion, the Indian logistics market is on the cusp of a major transformation. The combination of government initiatives, technological advancements, and a growing e-commerce sector is setting the stage for unprecedented growth. As the nation gears up for this journey, it must remain vigilant about safety and sustainability. The future is bright, and the logistics sector is ready to soar.
The National Logistics Policy, introduced in September 2022, is the backbone of this transformation. It aims to streamline logistics by increasing the share of railways in freight movement, currently a mere 18%. The development of dedicated freight corridors (DFCs) is a game-changer. As of April 2024, 96% of these corridors are complete, poised to enhance rail freight capacity and efficiency. This shift is akin to turning a trickle into a torrent, redirecting the flow of goods across the nation.
Road transport dominates the current logistics scene, accounting for 71% of freight movement. This heavy reliance on roads contributes to logistics costs that consume 14% of India’s GDP—far above the 8-9% seen in developed nations. The skewed modal mix is a thorn in the side of efficiency. To combat this, the government has rolled out initiatives like the Goods and Services Tax (GST) and invested heavily in infrastructure. The goal? To align India with global standards, reducing logistics costs to a more manageable 8-9% of GDP.
The logistics sector is a sprawling ecosystem. It encompasses road transport, rail transport, air cargo, multimodal logistics, and industrial warehousing. Each segment plays a crucial role in the overall machinery. The domestic express logistics segment is set to outpace the rest, with a projected 14% CAGR from FY23 to FY28. E-commerce is the wind in its sails, driving demand for faster, more efficient delivery systems.
Organized players currently hold about 80% of the market. Their dominance is expected to grow, bolstered by government policies like the e-way bill and GST. The less-than-truckload (LTL) segment in road transportation is also on the rise, projected to grow at 10% CAGR. This segment caters to the increasing demand for smaller, more frequent shipments, allowing goods to bypass warehouses and reach retailers directly. It’s a shift from bulk to bite-sized logistics.
In parallel, the Delhi government is taking bold steps to clean up its streets. A new incentive scheme offers tax rebates of 10-20% for buyers of new vehicles who scrap their old, polluting ones. This initiative aims to phase out older vehicles, making way for cleaner alternatives. The rebates vary by vehicle type, with a 20% rebate for non-commercial CNG and petrol vehicles, 15% for commercial ones, and 10% for diesel vehicles. It’s a breath of fresh air in a city grappling with pollution.
Meanwhile, Maharashtra is stepping into the future with its ambitious plan for Green Integrated Data Centre Parks. With a projected investment of Rs 1.6 trillion, this initiative positions Maharashtra as a leader in the data center industry. It’s a magnet for multinational corporations and tech giants, enhancing the state’s digital infrastructure. This move is not just about data; it’s about creating a sustainable future.
However, not all is smooth sailing. The Indian government is grappling with safety concerns following the partial collapse of a canopy at Delhi’s Indira Gandhi International Airport. In response, the Central Building Research Institute (CBRI) has been called in to assess and advise on structural safety across airports nationwide. This incident highlights the need for vigilance and adherence to safety standards in infrastructure development.
The logistics market is a living organism, constantly evolving. The interplay of government initiatives, technological advancements, and market demands creates a dynamic environment. As India marches toward its ambitious target, the focus remains on efficiency, sustainability, and safety.
The road ahead is paved with challenges, but the potential is immense. With the right strategies and investments, India can transform its logistics landscape. The journey to Rs 13.4 trillion is not just a destination; it’s a pathway to a more connected, efficient, and sustainable future.
In conclusion, the Indian logistics market is on the cusp of a major transformation. The combination of government initiatives, technological advancements, and a growing e-commerce sector is setting the stage for unprecedented growth. As the nation gears up for this journey, it must remain vigilant about safety and sustainability. The future is bright, and the logistics sector is ready to soar.