Shangliao Sun
Research expert covering India
Logistics industry in India - statistics & facts
Logistics as an industry entails the management of transportation from raw materials to consumer goods. It is an essential part of any economic activities that involves the movement of physical items. As a country with a substantial geographic presence and the second largest population in the world, India’s logistics industry is predictably met with unique challenges. In terms of efficiency, it also lags behind in comparison with other BRICS countries. The average logistics cost per GDP among BRICS countries was 11 percent, however, in the case of India, the cost share per GDP was 13 percent. The high cost of logistics can be attributed to an inefficient modal mixture, especially with the road segment.
Road transport
Even though India has one of the highest road densities in Asia, the quality of roads when compared to other developing countries is subpar. Since the last few years, road infrastructure has seen a tremendous improvement with government reforms and investments. Some of the reforms like goods and services tax, including e-way bill, which led to increased formalization of the sector, greater transparency, and faster turnaround time. The road transport industry is consolidating, with smaller unorganized players dropping out of the market, and organized players gaining ground.COVID-19 impact on the sector
The COVID-19 pandemic with its long-lasting impact on the Indian economy has two key impacts on the logistics industry in India. The first being on warehousing and the second on the transportation. For the short term, demand estimation, capacity allocation, product distribution across different sectors and regions would remain the major difficulties for the industry. Ordering and maintaining appropriate quantities of inventory stored in warehouses have become more challenging as the traditional forecasting methods have become ineffective. Further, the pandemic has forced the country to restrict the movement of goods and people, which led to the use of suboptimal routes along with a shortage of truck drivers. It was clear that the pandemic has exposed the shortcomings and inefficiencies of India’s current logistics industry. Through a shift to more formal and technologically capable organizations, the industry would be better armored to take up larger challenges from the ever-growing domestic and international economic scene.
