Industry Outlook of Logistics Industry in India

Logistics industry in India is gaining momentum at a fast pace with the evolution of infrastructure and technological innovations with the emergence of new types of top logistics companies in India. The Indian logistics industry is defined by its ability to function as an integral service to the customers in helping them ameliorate their overhead costs in the logistics sector in India. Logistics is regarded as a crucial sector of the economy to offer cost-effective solutions for shipment and transportation of goods that supports various other commercial sectors. The logistics market in India comprises shipping, port-services, warehousing, rail, road and air freight, express cargo and other value-added services. The logistics sector in India supports various components of the manufacturing industry in India. Over 50% of the logistical requirements are outsourced by the top logistics companies in India. 

 Transport is a crucial component of the Indian logistics industry, being about half the size of the Indian logistics industry market size, followed by warehousing and storage, comprising another 25-30% of the total market. The rest of the Indian logistics industry market size constitutes value-added and freight forwarding services. Road transportation with over 50% market share dominates the logistics industry in India, succeeded by the railway’s sector at over 30%, water transport at 7%, and air shipment at 1%. The boom in the e-commerce sector and expansionary policies of the FMCG firms have increased the service geography of the best logistics companies in India. The industry has moved from being just a service provider to provider of end-to-end supply chain solutions to their customers.

The New Horizons in Indian logistics Market

The development in technology and the birth of new industry verticals have created high demands for logistics and delivery of products/services. Not just this but the new set of requirements arisen from the people with busy lifestyles have also added to the increase in logistics demand. Today, if you have done a lot of shopping and still have other plans before heading home, logistics services provider home delivery of your shopped products at your ease of time.

What can be better than having hassle-free timely delivery of the products and services right at the doorstep anywhere in the world? The growing market with the help of technology and developing infrastructure have made it possible. Developed countries have strengthened their infrastructure and transport system to their full potential in facilitating seamless logistics services in both domestic and cross-border territories. The globalization at the fastest pace ever has taken industries with a storm and the movement of goods from the origin point to delivery station has been made effectively fast and secure. Whether it is a small courier or a complete cargo, logistics has made it easier for people to transport their products on time. The rise of e-commerce on the global platform in the recent times has made logistics a major player in the world economy.

The efforts to organize the unorganized logistics sector

The government of India has established a separate logistics division in the department of commerce to work for the integrated development of the industry both in the domestic and the international domain. In fact, the Ministry of Commerce and Industry (MoCI) has proposed framing of a unique dedicated online portal to accentuate logistics services in the country and bringing together the buyers, logistics service providers, and the related government agencies. The Ministry of Transport is also playing a key role in upbringing the logistics sectors by strengthening the land connectivity through various programs like ‘Sagarmala’ project.

The economic survey 2017-18 presented in the parliament has speculated the Indian logistics Industry to grow at a CAGR of 10.5% crossing the 200 billion USD mark in coming time. With currently 22 million people employed in the industry, logistics is expected to extend employment to over 40 million people by 2020. With such a promising future, the Indian logistics sector has become the new sensation encouraging GoI to frame a dedicated IT backbone for this industry. Even the import-export system has been upgraded reducing the cargo release time to only 2 or 3 days.

The Goods and Service Tax (GST) framed under the center and state list has paved the path for a better logistics sector. The Central Board of Indirect Taxes and Customs (CBIC) under the Ministry of Finance also has brought new provision under CSB IV and CSB V to the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 providing people 100% GST refunds in the logistics services. Customers can easily move their shipments with minimal paperwork and faster delivery and customs clearances with the new policy change by the GoI. Apart from this, to foster the growth of logistics sectors many start-ups and established enterprises have entered the market equipped with the latest technology, quality warehousing, and functional transport facility to provide world-class services in the Indian market. The recent entry of international logistics players has also ensured the boost of the Indian logistics industry. This will be a sight to behold the glorious rising of logistics industry in coming years, especially marking 2020.

Indian Companies is also supporting customers by offering Return Management, Fulfillment, Warehousing and 3PL services in all major eCommerce markets like USA, Europe, Australia and Middle East countries through their worldwide network. Which is creating a larger scope for Indian sellers to sell their products globally with a competitive edge. Also, now Indian logistics companies are creating opportunities for other counties sellers to sell their products in India by providing seamless custom clearance and distribution across the country. Therefore, Indian logistic industry is having more opportunities in the future time.

Logistics Sector in India Overview and Challenges

The highly integrated framework of logistics and transport is aimed with a goal of increasing the speed of transportation of the freight on highways across the country from the present speed of 20-30 km per hour to around 50 km per hour that will help cut down costs by almost half. The Indian road transport network is the major part of the transport network in India. The logistics sector in India is witnessing a growth of more than 10% every year. Various new policies and initiatives by the Indian government by decongesting the Indian roadways network are likely to augment the growth of the Indian logistics industry on the whole.  

In addition, the Indian logistics industry is expected to derive gains from the recovery and revival of the economy in the industrial sector and also foster the growth of the logistics industry in India. The logistics industry in India is finding many other sectors that are investing heavily, such as aviation, FMCG, and metal & minerals. The Indian logistics industry looks well-poised for a bright future with the entry of many foreign companies and their focus on outsourcing their logistical requirements. The Indian logistics sector is likely to continue growing at over a CAGR of 10% for the next few years, thereby aiding the growth of the Indian economy on a large scale.

Warehousing may pull in $10 billion in next 4-5 years

With e-commerce players expanding operations across the country, there has been a corresponding rise in demand for space from these companies in both tier I and II markets and this is expected to add to robust growth in Delhi NCR, Mumbai, Pune, Bengaluru and Chennai markets. 

“Warehousing and logistics sector has been growing steadily since 2017, when it was granted an infrastructure status. Structured reforms such as the implementation of Goods and Services Act, the formation of a Logistics Department under the ministry of commerce and industry and various other policy changes have directly or indirectly resulted in sector’s growth of the sector”  

A key trend emerging now is the growing demand for warehousing and logistics space from tier II cities like Coimbatore, Guwahati, Lucknow, Jaipur & Ludhiana

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