An ocean of opportunities unfolding in India's logistics sector

India, with its vast resources and a large, young, and productive population is well-positioned in today’s global economic scenario. Our GDP is expected to more than double in the next decade, growing at annual rates of over 7%, and it is now certain that by 2030 India will be a $6-7 trillion economy and the world’s third largest nation in GDP terms.

Expectedly, along with this growth of the economy, one of the sectors that will see the fastest growth is logistics. Currently, India remains a nation where logistics as a percentage of the GDP stands at about 14% (on a comparative basis, developed nations are less than 9%). This is indicative of the inefficiencies of the logistics sector in India and therefore the potential for driving greater productivity across the entire logistics value chain, along with the tailwind of a rapidly rising GDP, makes this sector an exciting and high growth one that is expected to grow at a 15% CAGR and be worth over $300 billion by 2020.

A key factor for the global resurgence and excitement in the logistics sector is the pace and applicability of almost every new evolving technology that is enabling customers to create new transformational business models. We remain fully focused on continuing to be a leader in adopting technologies that will allow us to to digitise our core processes and reinforce our technology foundations to drive towards greater levels of productivity as well as offer our national and international customers new forms of services that align with their business models. These new business models provide us with new avenues of growth.

Our unique advantage comes from the different hub ports we have built across India’s coastline. This puts us in a competitive position to expand deeper into the hinterland and build on the synergies of a hub-and-spoke model that we are setting up across the country, as we build out spokes in the form of a network of warehouses and inland ports. This will allow us to focus more holistically on our customers and provide them with an end-to-end logistics service that possibly no other company in the country can offer as broadly and deeply as we can. This in turn will drive greater traffic to our ports thereby allowing us to expand the most profitable part of our business within the logistics value chain.

In this context the move by the Central Government, that recently created a dedicated logistics division in the Ministry of Commerce and Industry, to oversee inputs from the roadways, shipping, aviation and railway ministries should add further impetus to this sector that will stimulate key national programmes including ‘Make in India’ and ‘Digital India’ and spur job creation as well as improve India’s ease-of doing-business ranking. Our incumbent position as India’s logistics leader stands to benefit strongly with the streamlining of these programmes.

Therefore, our strategy to capitalise on our operating model by internally developing some of the best leaders in the logistics sector and hiring among the best talents from the market, being laser focused in increasing our levels of integration across different parts of the logistics value chain, investing in infrastructure to stay ahead of the curve to build competitive differentiation, being a fast technology adopter, and moving deeper into the hinterland to continue to strengthen our hub and spoke model – remains the way we will continue to deliver shareholder value. We are confident in the significant medium to long term growth potential of the ports and logistics sector as well as the complementary businesses and expect to continue to gain competitive market share. We have therefore carved out a 3-year, ` 2,500 crore annual capital expenditure plan to capitalise on this growth potential.

As always, we take a long view of our business and sustainability remains at the heart of all our strategies. We continue to steadily reduce our carbon footprint, encouraging renewable energy usage and afforestation, while at the same time empowering communities wherever we operate. Our community development spans education, healthcare, sustainable livelihood creation and rural infrastructure development. Our CSR initiatives are also in line with the Sustainable Development Goals.