H. Yoo
Research expert covering South Korea
Logistics industry in India - statistics & facts
As a country with a substantial geographic presence and the world’s largest population, the logistics industry in India faces some unique challenges. In comparison with other BRICS countries, India spends a substantial amount on logistics. The average logistics cost per GDP among BRICS countries was at 11 percent. However, in the case of India, the cost share per GDP was 16 percent as of 2024. The high cost of logistics is due in part to an inefficient modal mixture as the road segment dominates the sector. The combination of inadequate road infrastructure, a fragmented warehousing market, urban congestion, insufficient ports, and limited freight railway networks further impairs the efficiency of the industry.
New demand driven by e-commerce
Thanks to the rapid growth in the number of internet users and increasing disposable income of the population, the e-commerce market in India has grown exponentially in the last decade. From home appliances to consumer electronics to groceries, everything can be purchased online and be delivered to your doorstep in a short time. Alongside the digital infrastructure, the logistics industry has played a vital role in making this a reality. Adding to this, the increasing popularity of online shopping will further drive up the demand in the logistics sector. It is critical for the logistics sector to reduce costs to stay competitive.Road transport at the center
Even though India has one of the largest road networks in the world, the quality of roads when compared to other countries is subpar. Combined with the fact that the Indian logistics industry relies heavily on road transport, road quality was the biggest single factor hindering the efficiency of the industry. The Indian government has been aware of the issues and, for the last few years, has invested heavily on road infrastructure and introduced several reforms regarding the road logistics sector. The construction rate of national highways in the country almost tripled in comparison with a decade ago. During this time, the road logistics sector saw increased formalization, greater transparency, and faster turnaround time.Impact of COVID-19 still lingers
The COVID-19 pandemic with its long-lasting impact on the Indian economy has also affected the logistics industry in India. All major logistics segments saw a decrease in transaction volume during the pandemic. The warehousing sector has been working to improve demand estimation, capacity allocation, and product distribution across different sectors and regions. New forecasting methods are being developed as the traditional ones have become ineffective. In addition, the pandemic has forced the country to restrict the movement of goods and people, resulting in a shortage of truck drivers which continues to affect the industry today. However, the industry is meeting these challenges by moving toward more formal and technologically capable organizations. Building a more resilient and efficient logistics industry will pave the way for lower logistics costs and greater competitiveness in the global market.
