India's Logistics Sector: The Transformation that awaits

India's Logistics Sector

In 2018, India jumped to 44th rank in World Bank’ s Logistics Performance Index (LPI) from 54 th rank in 2014 in terms of Overall Logistics Performance among 160 countries. (Source: World Bank)

The LPI considers the efficiency of the clearance process, quality of related infrastructure and logistics services, competitive pricing, ease of tracking and timeliness of shipments to estimate a rank.

The Logistics Sector was given the status of Infrastructure, to boost investments in the sector in November 2017 by the Government of India. (Source: IBEF Trust India’s logistics industry, which is worth around USD 160 billion at present is likely to touch USD 215 billion by 2020 with the implementation of GST. (Source: Economic Survey 2017-18)

India’s Logistics Sector provides employment to more than 22 million people and it has grown at a compound annual growth rate (CAGR) of 7.8 % during the last five years. (Source: Economic Survey 2017-18)

Are these fascinating enough?

We, as a country definitely are gaming up on the Logistics sector in today’s fast paced competitive Indian market, especially in the e-commerce space. Today, with the importance of ‘Logistics’ being preeminent in business environments, India’s Logistics sector has a huge role to play in its economy. With the advent of e-commerce industry in India, the entry of big impactors in the e-retail sector, the introduction of products with short life cycles, the surge in demands of customers, improved connectivity across regions etc., the role played by the Logistics sector has never been more compelling.

Fascinating facts aren’t over yet. The Logistics sector alone is expected to create employment for around 14 million people, over the next four years (by 2022), making it the largest job-creator in the infrastructure space. The Government of India is committed to bringing the Logistics sector to the forefront and has promised a huge sum of Rs 6 Lakh Cr this financial year. More than half of this will be used for relevant associated infrastructural developments and is aimed at bringing down the cost of logistics from a staggering 14.4% of GDP to about a 10% level over next three-four years, making the sector more competitive.

Earlier, the Logistics sector was mainly seen to be comprised of transportation and warehousing. But today, its implications span across all the aspects of value chain, including integration of transportation, distribution, warehousing, reverse logistics, value added services such as payment collection, packaging, documentation, real-time tracking and tracing, etc. Also, the advancements in recent years has contributed immensely in defining a structure of the otherwise fragmented and unorganised Logistics sector. A sound Logistics sector can go a long way in boosting India’s pursuit of being a manufacturing giant for several initiatives like ‘Make in India’, launched by the Government.