Indian Logistics Sector Set for Dynamic Growth

India’s logistics industry is on the brink of transformative growth, projected to achieve a remarkable compound annual growth rate (CAGR) of 11%, soaring to a substantial USD 468 billion by the fiscal year 2027. This anticipated surge is bolstered by significant enhancements across critical infrastructure segments and the integration of technological innovations that are amplifying operational efficiency and driving down costs.

Since 2014, the Indian government has significantly increased its budget allocations for road infrastructure by an impressive 500%. This funding infusion has yielded notable improvements in logistics capabilities, with projected annual savings of up to INR 4.8 trillion in logistics costs. Such savings underscore the vital role infrastructure plays in catalysing growth within the sector. Additionally, rail freight loading has shown steady upward momentum, achieving 1,591 million tonnes in fiscal year 2024, primarily due to the establishment of dedicated freight corridors that have optimised operations and enhanced overall efficiency.

The Indian air cargo industry has also demonstrated resilience, achieving a staggering CAGR of 23% from fiscal year 2021 to fiscal year 2023, successfully navigating the challenges posed by the global pandemic. Major ports across the country have made significant contributions to the logistics sector, managing 819 million metric tonnes of cargo traffic in fiscal year 2024, reflecting a commendable 7% CAGR from fiscal year 2021. The incorporation of digital technologies—such as RFID, GPS, IoT, and artificial intelligence—has emerged as a crucial factor in realising efficiency gains within the logistics landscape. These technological advancements not only streamline operations but also contribute to significant cost reductions, positioning the industry for sustainable growth.

The logistics sector currently supports over 22 million livelihoods in India, with projections indicating the creation of an additional 10 million jobs by 2027. This highlights the sector’s significance as a major employment generator in the country. India’s notable ascent to the 38th position in the World Bank’s Global Logistics Performance Index in 2023 reflects the strides being made towards enhancing global competitiveness. As the nation aims to secure a place among the top 25 logistics performers by 2030, initiatives such as the E-way bill system, the PM GatiShakti National Master Plan, and the National Logistics Policy are set to further revolutionise and elevate India’s logistics ecosystem, fostering a sustainable future.