16 Aug 2022
What is needed for a more organised logistics sector in India?
India's logistics industry considered the lifeline of the nation, plays a crucial role in connecting various markets, suppliers, and customers spread across the country, and has now been integrated into the national GDP value chain.
In the financial year 2021, the size of the Indian logistics services market was around 250 billion U.S. dollars. It was estimated that this market would grow to 380 billion dollars in 2025, at a compound annual growth rate between 10 to 12 percent.
Only 10-15 percent of the $215-billion logistics service providers are organized players. More players are needed together with a need to reduce logistics cost to 10 per cent by 2022 from about 14 per cent now. Another factor is the need for automation in this sector, including handheld computers, forklifts, and conveyer belt systems.
Over 22 million people depend on the Indian logistics sector and improving the sector will help reduce indirect logistics costs by 10%, resulting in a 5 to 8% increase in exports. This sector consists of over 1,000 active players which include large scale domestic players, leading units of global players, the government postal service and evolving start-ups specializing in e-commerce deliveries.
According to the Union Budget 2020-21, the Government of India will release a National Logistics Policy soon clarifying the roles of the Union Government, State Governments, and key regulators. It also talks about a reduction in the logistics cost to less than 10% of GDP by 2022.
The Patparganj Industrial Estate in Delhi and Delhi NCR hosts a wide range of logistics service companies. Logistics encompasses the entire supply chain, including transportation, customer service, inventory management, and order processing. Deeper penetration into rural Bharat (Tier II, III, IV towns), economy-enhancing initiatives, GST implementation, Make in India, Digital India, and soon-to-be-published National Logistics Policy all hold promise for a more efficient, integrated logistics industry in the coming years.