As stated in a recent report by ResearchAndMarkets, the Indian logistics industry is expected to grow at a CAGR of 10.5% from 2021 to 2026.
This growth is being driven by a number of factors, including the increasing adoption of technology and automation, the rise of e-commerce and online shopping, and the government’s push for infrastructure development and improvement. The COVID-19 pandemic has also highlighted the importance of efficient logistics and supply chains, further fueling the growth of the industry.
In addition to these overarching trends, there are a number of specific developments and initiatives happening within the Indian logistics industry. For example, the implementation of the Goods and Services Tax (GST) has streamlined logistics processes and reduced transportation times and costs. The development of dedicated freight corridors is also improving connectivity and efficiency across the country.
The following factors have been identified as contributing to the expected growth of the logistics industry in India from 2021 to 2026
The logistics industry is a vital part of the global economy. It involves the transportation, distribution, and storage of goods across different regions, countries and continents. Current State of the Logistics Industry: The logistics industry has been growing rapidly over the past few years. According to a report by Allied Market Research, the global logistics market is projected to reach $12,256 billion by 2027, growing at a CAGR of 6.5% during the forecast period of 2020-2027.
Factors Driving Growth in the Logistics Industry: The growth of e-commerce, along with the increasing need for faster and more efficient supply chain management, has been driving the growth of the logistics industry. In addition to this, the emergence of new technologies such as IoT, AI, and blockchain has been transforming the way logistics operations are carried out.
Challenges Facing the Logistics Industry: Despite the growth of the logistics industry, there are still several challenges that it faces. These include rising fuel prices, increasing competition, and the need for better infrastructure. Future of the Logistics Industry:
The logistics industry is expected to continue its growth trajectory in the coming years. The emergence of new technologies is expected to improve the efficiency and effectiveness of logistics operations. Additionally, there will be a greater focus on sustainability, with companies adopting eco-friendly practices to reduce their carbon footprint.
The report highlights that one of the key drivers of this growth is the increasing demand for logistics services from various sectors such as e-commerce, FMCG, automotive, and pharmaceuticals. The rise of e-commerce has especially been a game-changer for the logistics industry, as it has led to an increase in the need for last-mile delivery services.
E-commerce boom
With the growth of online shopping in India, the demand for logistics services is expected to increase. This trend is expected to continue as more and more people are opting for online shopping due to the convenience it offers.
Government initiatives
The Indian government has introduced various initiatives like the Make in India and Digital India campaigns to promote the growth of the logistics industry. These initiatives are expected to attract more investment in the sector and help in its growth.
Infrastructure development
Another factor driving the growth of the logistics industry in India is the government’s focus on improving the country’s infrastructure. The government has been investing heavily in developing road, rail, and air infrastructure, which has led to faster and more efficient movement of goods across the country. The government has also invested heavily in the development of infrastructure like highways, railways, and airports, which will help in faster and more efficient transportation of goods.
GST implementation
The implementation of the Goods and Services Tax (GST) has led to the simplification of the tax system and reduced the documentation required for the inter-state movement of goods. This has resulted in a reduction in logistics costs and is expected to drive growth in the industry. The GST has replaced multiple state and central taxes, making the movement of goods across state borders easier, faster, and more cost-effective. This has led to a reduction in transit time and logistics costs, which has been a boon for the industry.
Emergence of start-ups
The logistics sector has seen the emergence of a number of start-ups offering innovative solutions like last-mile delivery, reverse logistics, and real-time tracking. These start-ups are expected to drive the growth of the sector by offering better services and increasing competition.
However, the report also highlights some of the challenges faced by the logistics industry in India. One of the major challenges is the lack of skilled manpower.
The industry requires skilled professionals such as drivers, warehouse managers, and logistics coordinators, but there is a shortage of such professionals in the country. This has led to a high turnover rate and increased costs for logistics companies.
Addressing the Shortage of Skilled Manpower
The logistics industry in India also faces a shortage of skilled manpower. According to a report by the National Skill Development Corporation, the logistics industry in India will require an additional 28.4 million skilled workers by 2022. To address this issue, the government has taken several measures, including the launch of the Pradhan Mantri Kaushal Vikas Yojana (PMKVY). This scheme aims to train and certify individuals in various skills, including those required in the logistics industry.
Industry players have also taken several initiatives to address the shortage of skilled manpower. Companies such as Flipkart and Amazon have launched logistics training programmes to train individuals in various logistics-related skills.
Another challenge faced by the logistics industry in India is the lack of infrastructure
The Indian government has recognised the importance of improving the logistics infrastructure in the country. As a result, several initiatives have been taken to address this issue. One such initiative is the Bharatmala Pariyojana, which aims to develop 34,800 km of highways across the country. This project is expected to reduce logistics costs and improve connectivity between different parts of the country.
The government has also initiated the Sagarmala Programme, which focuses on the development of port infrastructure in India. The programme aims to increase the capacity of existing ports and develop new ones. This will not only improve the efficiency of the logistics industry in India but also reduce the dependence on road transport.
Overall, the Indian logistics industry is poised for significant growth over the next several years, driven by a combination of factors including e-commerce and infrastructure investments. This growth presents both opportunities and challenges for businesses in the sector, as well as potential benefits for the wider Indian economy. While there are obstacles to overcome, efforts are being made to address these challenges and sustain the industry’s growth trajectory.
