Logistics Market Growth in India

The Logistics Performance Index 2018 prepared by the World Bank ranked India 35th out of 167 countries worldwide. Estimated at $215.2bn in 2021, the Logistics Industry in India, comprising of freight and transportation as well as inventory and warehousing, has been gaining traction in the past few years, and is playing an inevitable role in facilitating trade and constant evolution of the Indian economy. Several factors such as – upgrading infrastructure, opportunities in growing markets and channel alliances, urban sprawl, rapid adaption to newer technologies and digitalization, higher consumer demand to bring down delivery time, and usage of contemporary are contributing towards the expansion of the industry, which is expected to reach about $255.0bn in 2022, at a CAGR of 10.5%. However, there is substantial potential for improvement and an urgent need for the sector to get organised as it is extremely fragmented with numerous unorganized players. Small number of formal transport companies that can use efficient technologies, India’s overcrowded highways, a serious shortage of drivers, the failure of logistics functions to use best practices, as well as the insufficient degree of coordination and collaboration have all exacerbated the problems.

Logistics-Market-Growth-in-India

Emerging players:

The top 10 logistics companies in India include: Container Corporation of India Ltd., Blue Dart Express Ltd., Aegis Logistics Ltd., TCI Express Ltd., Mahindra Logistics Ltd., Allcargo Logistics Ltd., VRL Logistics Ltd., Gateway Distriparks Ltd., Transport Corporation of India Ltd. and Gati Ltd.

Impact of the COVID-19 crisis:

Ever since the Covid-19 outbreak, more or less business conduct in every industry and every part of India has been affected. Logistics has been particularly hard-hit, without which only certain cottage industries may function. Even before the second wave of the disease began in 2021, the pace of recovery was unclear. The two key functions of the logistics sector: warehousing and transportation have been experiencing several challenges.

Warehousing- Ordering and maintaining appropriate quantities has now become all the more difficult because traditional forecasting techniques have become outdated. Most companies have minimized their product mix to devote warehousing to only vital products. The prevailing skepticism around supply, due to the pandemic might make producers want to keep surplus inventories rather than experiencing stock crunch. Smaller warehouses at multiple locations are preferred over large regional warehouses to respond better in case any unpredicted situation arises.

Transportation- The lockdown forced restrictions on movement of goods across government-defined zones and states, hence the use of suboptimal routes has increased. Railways being the only mode of conveyance operating without any restrictions, dominated the transportation during lockdown. A shortage of drivers raised the rental cost of trucks. To become more responsive to changing demand, companies are increasing their use of LTLs (less-than-truckload). Covid-19 intensified the emphasis on E-commerce, since urban consumers have shifted to online shopping in large numbers. To stay relevant post-pandemic, all logistics partners have to keep up with the shift to digital economy.

Innovation in the logistics sector:

  • Third-party (3PL) and fourth-party (4PL) logistics service providers to handle complicated supply chain issues coming to light.
  • Development of Multimodal Logistics Parks (MMLPs), well-organized economic corridor routes for orderly delivery, and intermodal stations to connect discrete modes of transportation to make business unification certain.
  • Integrated cold chain and safeguarding infrastructure space using high-end technology, without any obstacles, from the farm gate to the consumer.
  • Use of durable and eco-friendly base for e.g., using fleet of electric vehicles for last mile delivery.
  • Increasing investment into Logistics start-ups to propel growth and advancements in the sector.
  • Digitalization of logistics sector by installation of artificial intelligence, blockchain, and other technological solutions to promote the free flow of data, reduce human contact and solve other inefficiencies is an urgent need in order for the sector to survive in the long term.
  • Driverless vehicles, wearable devices, warehouse digitization/automation to attain operational regulations to counter supply-chain cost pressures in the sector.

Initiatives taken by the Government of India:

Strong growth supported by government reforms, transportation sector development plans and growing retail sales holds the potential to drive the growth of this segment and contribute up to 25%–30% of the GDP by 2025. The E-commerce sector is becoming extremely popular with the introduction of online payments such as Amazon Pay, Paytm, Gpay, and new popular delivery apps. The “Make in India” initiative is envisioned to provide goods that will be produced and transported to markets at reasonable prices. The National Logistics Policy to be released by the Government aims to promote seamless movement of goods by focussing on several areas such as process re-engineering, digitisation, focus on multi-modal transport, EXIM trade etc. and will look at improving logistics in core sectors. Effective implementation of the policy would help provide an impetus to trade, enhance export competitiveness, and improve India’s ranking in the Logistics Performance Index. The Multi-Modal Logistics Parks Policy (MMLPs) is another key policy initiative of the Government of India to lower freight costs, reduce vehicular pollution and congestion, and cut warehouse costs to promote domestic and global trade. The developments of Bhratamala Pariyojana and the Sagarmala projects and the Eastern and Western Dedicated Freight Corridors are expected to boost the industry.


At ‘Untapped Markets’, we believe that with further investments in the logistics infrastructure, government initiatives and e-commerce growth, we could witness a lot of innovations in this sector and ample opportunities for growth for players who are able to differentiate their proposition in the market.

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