The Indian logistics market, valued at $107.16 billion (₹9 trillion) in FY23, is projected to grow to $159.54 billion (₹13.4 trillion) by FY28, at a compound annual growth rate (CAGR) of 8-9%, as per a report by Motilal Oswal. This expansion is driven by structural reforms, advances in technology, and government efforts aimed at reducing logistics expenses and improving infrastructure. The National Logistics Policy, introduced in September 2022, seeks to transform India’s logistics sector by increasing the share of railways in freight transport from the current 18%, through initiatives such as dedicated freight corridors (DFCs), better road infrastructure, and the growth of inland waterways.
As of April 2024, 96% of DFCs are complete, which will enhance rail freight capacity and efficiency, increasing its contribution to the overall logistics mix. Furthermore, port privatization initiatives have boosted infrastructure and operational efficiency, benefiting key players like Adani Ports and JSW Infrastructure. At present, logistics costs in India account for 14% of the country’s GDP, significantly higher than the 8-9% observed in advanced economies, primarily due to an over-reliance on road transport, which handles 71% of freight movement. To correct these imbalances, the government has introduced measures like the Goods and Services Tax (GST) and has heavily invested in roads, waterways, and DFCs. These steps are expected to bring down logistics costs to 8-9% of GDP in the coming years, aligning India with international standards.
The logistics sector in India includes various modes such as road, rail, air, and multimodal transport, as well as industrial warehousing. The express logistics market is poised to grow faster, with an anticipated 14% CAGR from FY23 to FY28, fueled by the expansion of e-commerce. Organized logistics firms currently dominate 80% of the market and are expected to strengthen their position by leveraging policies like GST and the e-way bill. Additionally, the less-than-truckload (LTL) segment is forecasted to grow at a 10% CAGR, driven by rising demand for smaller, direct-to-retail shipments, bypassing traditional warehousing.
