The logistics industry is a dynamic factor of the economic landscape of India as it enables
movement of goods and services throughout the country’s large territory. As India strives
to realise its economic goals, including achieving a GDP of US$ 5.5 trillion by 2027, the
transformation of its logistics sector emerges as a new phenomenon.
By supporting various industries, from manufacturing to agriculture and e-commerce, the
logistics sector faces a lot of challenges and offers a number of opportunities. In short, we
await the emergence of a more agile, resilient and competitive logistics infrastructure in
India.
Growing significance of the Indian logistics sector
The Indian economy currently ranks fifth in the world with a GDP of approximately US$ 3.7
trillion in 2023. Though there was a rapid growth between 2015 and 2019 because of
COVID-induced lockdown, GDP shrank 7.3% in 2020. The service sector’s comeback,
manufacturing sector’s revival and agricultural growth propelled strong recovery in 2021
and 2022, resulting in a remarkable 15.3% growth over 2020-22. India is being promoted
into a ‘global manufacturing hub.’
Growth in manufacturing would need efficient and technology-enabled supply chain
solutions to support global companies. India has the capabilities to become a trusted
supply chain partner to domestic and global trade by offering efficient and complex supply
chain solutions. With newer technological advancements, the country is also bringing
significant changes to its logistics sector to automate and optimise the process. Over the
last five years, India has consistently improved its ranking on various global manufacturing
performance indicators, rising six places to 38th among 139 countries on the Logistics
Performance Index.
Overview of India’s logistics landscape
The Indian logistics sector is one of the largest in the world and presents a huge growth
opportunity. The sector is critical for the country’s economic growth as it connects various
elements of the economy and consists of transportation, warehousing and other supply
chain solutions ranging from suppliers to end customers.
A logistics division was set up by the Department of Commerce in July 2017 to oversee the
integrated development of the sector. Led by the Special Secretary to the Government of
India, the division aims to enhance the sector by devising action plans for policy reforms
and process enhancements, addressing challenges, and embracing technology.
The industry is characterised by dynamism- ever-changing and evolving to meet rising
demands. Technological advancements, infrastructure enhancements and governmental
initiatives, including GST implementation and the National Logistics Policy (NLP), are
precipitating substantial transformations within the sector. Digitalisation, augmented
connectivity, and the adoption of cutting-edge technology such as Radio Frequency
Identification (RFID) and Global Positioning System (GPS) are boosting operational
efficiency while controlling costs. Furthermore, the surge in e-commerce activities and
international trade is propelling demand for streamlined logistics solutions. Despite
persistent challenges such as infrastructural deficits and other regulatory factors, the
industry is ready for significant expansion, presenting domestic and international entities
with opportunities to flourish within India’s flourishing market.
Key advantages of efficient logistics infrastructure
Logistics ensures a smooth and efficient supply chain, with lesser delays and reduced
lead times. This efficiency is vital for businesses to meet consumer demand promptly and
optimise production processes.
Logistics networks enhance connectivity and accessibility, linking various regions and
markets. This will help businesses to reach a wider customer base and better trade
relations between regions.
Efficient logistics operations contribute to cost reduction in transportation, storage, and
distribution. This, in turn, increases competition as they can offer products at competitive
prices in the market.
The logistics sector is a significant source of employment, providing jobs in
transportation, warehousing, distribution, and related services. This in turn contributes to
income generation and economic empowerment. The logistics industry in India, which is
one of the largest employment sectors, currently provides livelihoods to over 22 million
people. The sector is projected to add 1crore jobs by 2027.
The newest forms of technology (such as GPS tracking, RFID, etc) improve operational
efficiency, reduces costs, and enhances overall productivity. This technological
advancement positively influences the broader economic landscape.
A well-developed logistics sector facilitates economic integration by connecting various
economic zones and promoting an uninterrupted flow of goods and services. This
integration is essential for fostering a more robust and interconnected national economy.