This growth is being driven by structural changes, technological advances and government initiatives aimed at reducing logistics costs and improving infrastructure.
He National Logistics Policyintroduced in September 2022, has set objectives to optimize India’s logistics landscape. It has focused on increasing the share of railways in freight movement (currently at 18 per cent) by developing dedicated freight corridors (DFCs), improving road infrastructure and expanding inland waterways.
The commissioning of the DFCs, which are 96 percent complete by April 2024, will increase the capacity and efficiency of rail freight transport, increasing its share in the overall modal mix.
Additionally, the government’s push for port privatization has led to improved infrastructure and efficiency at Indian ports, benefiting major operators such as AdPorts and SEZ (APSEZ) and JSW Infrastructure.
india logistics cost as a percentage of GDP it currently stands at 14 percent, significantly higher than the range of 8 to 9 percent in developed countries. The skewed modal mix, with roads accounting for 71 percent of freight movement, plays a major role in these elevated costs. In comparison, railways and waterways have a much smaller slice of the logistics pie. To address these inefficiencies, the government has implemented key initiatives such as the Goods and Services Tax (GST) and invested heavily in road infrastructure, inland waterways and dedicated freight transportation. runners (DFC).
These measures are expected to reduce the logistics cost-to-GDP ratio to 8-9 per cent in the coming years, bringing India in line with global standards.
The logistics market is very diverse and covers road transportrail transport, air cargo, multimodal logistics and industrial storage, among others.
The domestic express logistics segment is projected to grow at a faster pace, with a CAGR of 14 percent during FY23-28, largely driven by the expansion of e-commerce.
Organized players, who already control around 80 per cent of the market, are expected to solidify their dominance, taking advantage of government policies such as the e-transport law and the GST.
The less-than-truckload (LTL) segment in road transportation is also expected to see notable growth, with a projected CAGR of 10 percent.
This growth has been driven by increased demand for smaller, more frequent shipments, avoiding warehouse storage and reaching retailers directly. (ANI)
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