When we talk about the size of the Indian logistics market during the last year it was around 250 billion U.S. dollars. That's a lot of money, isn't it? As per the reports it has been stated that the size of this market will be touching the sky in the times to come.
How are logistics divided in India?
In India, the Freight and logistics market has been segregated by Function (Freight Transport, Freight Forwarding, Warehousing, and Value-added Services and Other Services) and End User (Manufacturing and Automotive, Oil and Gas, Mining, and Quarrying, Agriculture, Fishing, and Forestry, Construction, Distributive Trade, Healthcare and Pharmaceutical, and Other End Users (Chemicals, Telecommunications).
In simpler terms, Freight and logistics refer to the transportation of goods through air, rail, and roadways. When we discuss the current key trends in the world of Indian logistics, it includes the rapid increase in road infrastructure projects.
In the past, it was stated by the Union Minister of State for Road, Transport, and Shipping that the government aims to boost corporate investment in the roads and shipping sector and introduce business-friendly strategies that will balance profitability with effective project execution. As per the Department for Promotion of Industry and Internal Trade Policy (DPIIT) data, the construction development sector garnered an FDI inflow which was nearly worth USD 25.93 billion between the time span of April 2000 and December 2020.
In October of 2020, the foundation stone was set up by the government of India for nine national highway projects, with a total length of approximately 262 km worth USD 371.13 million in Tripura. The Government of India provided almost USD 1.4 trillion under the National Infrastructure Pipeline for FY 2019-2025. During 2019-25, the roads sector is likely to account for 18% of capital expenditure. The same month, the National Investment and Infrastructure Fund (NIIF) moved forward toward integrating its road and highway portfolio.
How did the Indian logistics get affected following Covid-19?
After the wide outspread of the corona virus, we saw a sudden shift of the traditional logistics to the digitization and contactless operations. Since then, the 'Make in India' was brought into the picture by the government of India which led to goods being produced efficiently and transported to markets at reasonable prices.
Another policy named 'Multi-Modal Logistics Parks' (MMLPs) policy is one key initiative that was introduced by the government of India to enhance and improve the condition of the country’s logistics sector. The main goal of this initiative was to lower freight costs, reduce vehicular pollution and congestion, and cut warehouse costs to promote domestic and global trade. Apart from this, the government is also putting its focus on strengthening the market in terms of competition, reduced freight rates and barriers, and technological developments.
How much have Indian logistics grown over time?
If you ask me, the Indian logistics market is still growing and evolving at every point in time as so many technological and infrastructural developments and various policy reforms have been taken by the government, including the introduction of e-way bills, fast-tag, e-invoicing, and GPS-based toll collection.
The Indian logistics market has seen a major jump that has resulted in robust growth with the highest share in the freight forwarding market, followed by the warehousing, courier parcel, and express and value-added services markets. Now that we have plenty of digital platforms such as Paytm, G-Pay, Amazon Pay, Phone Pe, and many more delivery apps, the economic sector has been more in the news, especially in the last two years.
How has E-commerce been driving the logistics industry?
When we ponder over the e-commerce sector it is expected to grow and evolve in the forthcoming financial years as well. A large majority of the growth has seen the light of the day due to increased use of the internet and Smartphone penetration.
With the help of the 'Digital India' program, the number of internet connections in India significantly increased to a total of 784.59 million in June of 2021. From this huge number of internet connections, 61% of connections were in urban areas, out of which 97% of connections were wireless.
In the last quarter of the year 2020, India's e-commerce order volume increased by a big 36 percent with the personal care, beauty, and wellness (PCB&W) segment being the largest beneficiary.
What is the future of logistics in India?
Let's gain a better picture of the Indian logistics market and where will it be in the near future. According to reports, it was estimated that the size of this market will go up to 380 billion dollars by the year 2025 at a compound annual growth rate between 10 to 12 percent. One of the prime reasons for the growth of Indian freight and logistics is the great investments that have been made by the government in the sector over the last couple of years.
If we compare the cost of GDP, then India has a higher level of logistics it stands tall at 14 percent in comparison to BRICKS average percent of just 11 percent. The Highway construction in India has boosted at a CAGR of 17% from FY 2016 to FY 2021. Even in the pandemic and several lockdowns, India was able to build 13,298 km of highways in FY 2021. That's an achievement in itself as when Covid hit us our entire world came to a standstill. Each one of us was merely thriving through the day but the government was then also pretty motivated to acquire its targets and objectives.
To sum it up, we would say that the situation of the Indian logistics will continue to get better with each passing day which is a good sign for the economy of the country too. Presently we are taking baby steps to achieve our goals, but it's all a game of hard work and patience so we must do that in order to get the desired results from the other end. They say little drops of water make the mighty ocean and the quote is apt for all walks of life.