future of logistics sector in India to grow in good speed

What is the future of logistics in India?

 

Indian logistics market logistics in India is expected to reach about USD 255 billion in 2022, growing at a CAGR of 10.5 per cent

LOGISTICS INDUSTRY IN INDIA

The logistics industry in India is highly fragmented, with numerous unorganized players. While there is a need for the highly fragmented Indian logistics market to get more organized, there is also a need to reduce logistics cost to 10 per cent by 2022 from
about 14 per cent now. Only 10-15 per cent of the $215-billion Indian logistics market is owned by organized player’s.

Many More players are there listed on N S E / B S E

The Indian logistics industry has been gaining traction in the last few years and plays
a very important role in facilitating trade and thereby propelling the growth of the Indian economy.

Several factors such as – improving infrastructure nationwide, opportunities in emerging markets and channel alliances, urbanization, faster adoption of newer technologies and digitalization, increased consumer preference for the reduced delivery time, and deployment of innovative techniques for a fast delivery of products are all playing the role of a catalyst in fuelling the growth of the logistics industry in India.

The logistics industry in INDIA, considered to be the lifeline of the country, holds unprecedented importance as it connects various markets, suppliers and customers dotted across the country, and has now been firmly embedded as an integral part of the national GDP value chain.

The deeper penetration into Bharat (Tier II, III & IV towns), economy enhancing initiatives, GST implementation and other initiatives such as Make in India, Digital India and soon to be released National Logistics Policy, all hold a promise for an efficient and integrated logistics industry in the days ahead.

Despite the enhancement in the logistics performance index from the 54th Rank in 2016 to th 35th rank in 2018, India has substantial potential for improvement. The Indian logistics sector provides livelihood to more than 22 million people and improving the sector will facilitate 10 % decrease in indirect logistics cost, leading to the growth of 5 to 8% in exports.

The growth in logistics sector is expected to be driven by increasing penetration of products into more cities and towns, as well as the growth of economic activity and manufacturing moving to these towns. In addition, the demand for value-added services from consumers provides opportunities for the industry players to elevate themselves from an operational role to a more strategic one.

The logistics industry is highly fragmented and consists of over 1,000 active players which include large scale domestic players, leading entities of global players, the express arm of the government postal service and emerging start-ups specializing in e-commerce deliveries. Infrastructure readiness and technology are expected to be the key drivers of growth for the Indian logistics industry.

GOVERNMENT POLICY in Logistic Industry

The Ministry of Commerce & Industry estimates that presently the country spends about 14% of its GDP on logistics, which is much higher than Japan (11%) and the USA (9-10%).

 During the Union Budget 2020-21, the Government of India announced that a National Logistics Policy will be released soon clarifying the roles of the Union Government, State Governments and key regulators. Policy also talks about reduction in the logistics cost to less than 10% of GDP by 2022.

With the implementation of GST, the Indian logistics market is expected to reach about USD 215 billion in 2020, growing at a CAGR of 10.5 per cent.

 

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