The logistics sector serves as a pivotal backbone of any economy. The competitiveness and overall satisfaction of consumers within an economy rely heavily on the efficiency of its logistics. In India, the logistics sector has witnessed substantial growth, largely fuelled by the thriving e-commerce and technological markets. Notably, the warehouse and logistics industry experienced a significant boost during the Covid-19 pandemic, escalating its share from 2% in 2020 to 20% in 2021. This surge was attributed to the heightened preference for online purchases during that period, further catalysing the expansion of e-commerce. Subsequently, this growth was amplified by governmental efforts to bolster infrastructure spending, propelling the economy’s advancement.
According to data from the Indian Brand Equity Foundation (IBEF), the Indian retail sector is forecasted to grow at a Compound Annual Growth Rate (CAGR) of 9% between 2019 and 2030, surpassing a market size of over US $18 trillion. Simultaneously, the logistics sector, known for its substantial employment generation, is witnessing encouraging projections. Valued at US$ 250 billion in 2021, this sector is anticipated to reach US$ 380 billion, showcasing a healthy year-on-year growth rate of 10% to 12%.
The Government of India aims to reduce the logistic and supply chain costs from 13-14% to 10% of GDP, aligning with industry standards. Despite railways historically being a pivotal mode of communication in India, its significance has gradually diminished post-independence, despite the lower transport costs compared to roadways. Yatish Kumar, CMD of Braithwait and Co, highlighted significant changes in wagon and roro designs to accommodate larger cargo, including vehicles like cars. Innovations include developing containers taller than the American models to suit Indian requirements, alongside the introduction of dwarf containers and lighter steel containers by DFC (Dedicated Freight Corridor).
However, despite India’s Logistics Performance Index ranking at 38 among 133 countries, Kumar noted a lack of alignment between policy and investment, hindering the sector from realizing its full potential.
Dr. Saumitra Mohan (IAS), Principal Secretary of the Transport Department in the Government of West Bengal, outlined various state initiatives. These initiatives included utilizing World Bank funds to establish jetties along the Ganga to facilitate roro services for trucks and buses, ultimately reducing logistical costs. Additionally, West Bengal plans to invest Rs.5000 crore over three years in waterways and surface transport, emphasizing a commitment to e-mobility.
Ratna Ratna Seakher, CMD of Balmer and Lawrie, emphasized the significance of artificial intelligence (AI) in transforming warehouses, particularly in the logistics sector. Balmer & Lawrie’s development of cold storages in key locations like Hyderabad and Bangalore has significantly enhanced the effi-ciency of handling agricultural products, potentially boosting India’s agricultural exports and minimizing perishability.
Shri Poddar highlighted the imbalanced freight movement in India, dominated by road trans-portation at 66% of cargo in ton-kms, followed by rail (31%), shipping (3%), and air (1%). Efforts are underway at both central and state levels to address this disparity by augmenting the share of freight transportation through railways and waterways. This involves expanding tracks, adapting wagon designs, and optimizing configurations to accommodate larger cargo volumes efficiently.
While India has made strides in improving its logistics sector, it remains imperative to reduce logistics costs from 13% of GDP to the global average of 8%. Failing to achieve this may impede India’s competitiveness in global trade and service offerings.