Indian logistics market to reach Rs 13.4 trillion by FY28

09 Oct 2024 CW Team

This expansion is driven by structural changes, technological innovations, and government initiatives focused on reducing logistics costs and enhancing infrastructure. The National Logistics Policy, introduced in September 2022, aims to optimise India’s logistics framework by increasing the share of railways in freight movement—currently at 18%—through the development of dedicated freight corridors (DFCs), along with improvements in road infrastructure and the expansion of inland waterways.

As of April 2024, DFCs are 96% complete, which is expected to significantly enhance the capacity and efficiency of rail freight and increase its share in the overall transportation mix. The government’s initiative to privatise ports has also improved infrastructure and operational efficiency at Indian ports, benefiting major operators such as Adani Ports and SEZ (APSEZ) and JSW Infrastructure.

Currently, logistics costs in India account for 14% of GDP, considerably higher than the 8-9% range found in developed nations. This disparity is largely due to an imbalanced modal mix, where road transport constitutes 71% of freight movement, while railways and waterways contribute much less. To address these inefficiencies, the government has rolled out significant reforms like the Goods and Services Tax (GST) and has heavily invested in road infrastructure, inland waterways, and DFCs. These efforts aim to reduce the logistics cost-to-GDP ratio to 8-9% in the coming years, aligning with global standards.

The logistics market is highly diversified, encompassing road transport, rail transport, air cargo, multimodal logistics, and industrial warehousing. The domestic express logistics segment is anticipated to grow even faster, with a projected CAGR of 14% from FY23 to FY28, largely fueled by the expansion of e-commerce.

Organised players, who currently control about 80% of the market, are expected to strengthen their position by leveraging government policies like the e-way bill and GST. Additionally, the less-than-truckload (LTL) segment in road transportation is forecasted to experience significant growth, with a projected CAGR of 10%, driven by the rising demand for smaller and more frequent shipments that bypass warehouse storage and reach retailers directly. (ET)

The Indian logistics market, valued at Rs 9 trillion in FY23, is forecasted to grow to Rs 13.4 trillion by FY28, achieving a compounded annual growth rate (CAGR) of 8-9%, according to a report by Motilal Oswal. This expansion is driven by structural changes, technological innovations, and government initiatives focused on reducing logistics costs and enhancing infrastructure. The National Logistics Policy, introduced in September 2022, aims to optimise India’s logistics framework by increasing the share of railways in freight movement—currently at 18%—through the development of dedicated freight corridors (DFCs), along with improvements in road infrastructure and the expansion of inland waterways. As of April 2024, DFCs are 96% complete, which is expected to significantly enhance the capacity and efficiency of rail freight and increase its share in the overall transportation mix. The government’s initiative to privatise ports has also improved infrastructure and operational efficiency at Indian ports, benefiting major operators such as Adani Ports and SEZ (APSEZ) and JSW Infrastructure. Currently, logistics costs in India account for 14% of GDP, considerably higher than the 8-9% range found in developed nations. This disparity is largely due to an imbalanced modal mix, where road transport constitutes 71% of freight movement, while railways and waterways contribute much less. To address these inefficiencies, the government has rolled out significant reforms like the Goods and Services Tax (GST) and has heavily invested in road infrastructure, inland waterways, and DFCs. These efforts aim to reduce the logistics cost-to-GDP ratio to 8-9% in the coming years, aligning with global standards. The logistics market is highly diversified, encompassing road transport, rail transport, air cargo, multimodal logistics, and industrial warehousing. The domestic express logistics segment is anticipated to grow even faster, with a projected CAGR of 14% from FY23 to FY28, largely fueled by the expansion of e-commerce. Organised players, who currently control about 80% of the market, are expected to strengthen their position by leveraging government policies like the e-way bill and GST. Additionally, the less-than-truckload (LTL) segment in road transportation is forecasted to experience significant growth, with a projected CAGR of 10%, driven by the rising demand for smaller and more frequent shipments that bypass warehouse storage and reach retailers directly. (ET)

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