In the past few years, India has been transforming into a global logistics hub. The country is witnessing a surge in investments in the logistics sector, which is expected to grow at an annual rate of 20 percent over the next five years. This shows that there's huge potential in this industry and it will continue to attract foreign investment. In order to make it easier for Indian companies to import or export goods around the world, they need efficient supply chains and modern technology.
India’s economy is a paradox when it comes to the logistics sector
The Indian economy is a paradox when it comes to logistics. India's economy is the seventh largest in the world and the third largest in Asia. The domestic market has huge potential, but its logistics performance index is low compared with other countries around it:
- India has no shortage of imports or exports (both at about 60% of GDP), but only about 40% of its goods move by road.
- Only about 20% of goods are shipped via air freight—the second lowest among major economies after Brazil (17%).
Logistics industry in India is of USD 160 billion.
The logistics industry in India is a USD 160 billion industry. It accounts for 8% of the country's GDP and employs 3 million people, according to a report by PwC.
India has similar GDP (Gross Domestic Product) as countries such as Saudi Arabia, Thailand, Malaysia and even Brazil which contribute around 2% towards global trade volume each year. So it becomes apparent that logistics plays an important role in maintaining this balance between supply chain management and transportation requirements across borders."
India's potential in logistics
India has a vast coastline and its population creates huge demand. The roads are congested, which affects the movement of freight across states. This situation is worsened by poor infrastructure and an inefficient transport system. To mitigate the problem, Indian Railways has proposed a plan to build 25,000 km of dedicated freight corridors over the next five years. The National High Speed Rail Corporation Limited (NHSRCL) is also working on its first bullet train project between Mumbai and Ahmedabad which will reduce travel time from eight hours to two-and-a-half hours. Recently, India's government announced a $100-billion plan to build 100 smart cities by 2022. This will boost the need for logistics infrastructure in the country. The market is also growing due to increasing urbanization and rising demand for consumer goods. India’s GDP is expected to grow at 7% annually over the next three years, according to PwC's report on Indian logistics.
India's vast coast line
The Indian coastline is 7500 km in length and is the 7th longest coastline in the world. It's dotted with many ports, which handle over 50% of India's maritime trade, providing a platform for both domestic and international cargo movements. In addition to handling large volumes of goods, these ports are also used as fishing grounds, tourist destinations and recreation areas.
India's population creates huge demand
The Indian population is expected to reach 1.7 billion by 2050, a growth of about 86% from its current size. This means that India's economy will need an additional 2 billion people over the next 35 years.
The logistics industry can play a critical role in meeting this demand for goods and services, as well as providing employment opportunities for professionals in logistics management, operations management and supply chain management disciplines.
The roads are congested, which affects the movement of freight across states.
The roads are congested, which affects the movement of freight across states. The traffic jams on the roads are one of the major problems faced by companies operating in India. This is because it causes delays, delays cause accidents and accidents cause pollution.
Inland waterways – An underutilized resource
Inland waterways – an underutilized resource
The importance of inland waterways in India cannot be overemphasized. It is one of the most important and effective ways to transport goods from one place to another. This is because it provides a direct link between different parts of a country and reduces transportation costs by eliminating intermediaries such as roads or railways, which are more expensive than other modes of transportation.
In addition, inland waterways have great economic impact on countries like India, which rely heavily on their ports for trade with other countries or even within their own borders due to high tariffs imposed by customs authorities at sea ports and airports respectively.
Railways – A sleeping tiger
India has one of the biggest railway networks. The reach and b usiness potential of the Indian Railways is huge, with more than 60% of the country’s population residing within a 100-km radius from a railway station. The railways also provide connectivity to remote parts of India where road infrastructure is poor or non-existent. The reach of railways allow people to travel long distances. The Indian Railways is one of the largest employers in India, with over 1.4 million employees. It is also one of the world’s largest railway networks, transporting about 23 million passengers daily and more than 2 million tons of freight daily across a route network of 65,000 kilometres (41,567 miles).
Many traditional freight forwarders have still not embraced digital transformation
Digital forwarders are a new concept in the logistics industry, but they're finding their niche by providing services that are a mix between traditional freight forwarders and ecommerce companies. They use technology to process orders and manage their business, which can help reduce costs for clients.
Given that we are living in the world of globalisation, India has to improve its logistics performance to become a global leader.
India’s logistics sector is expected to grow at a CAGR of 10% by 2022, making it the third largest logistics market in the world. This means that there will be more opportunities for businesses in this area.
India has been able to achieve this growth despite having a relatively small population compared with other countries where logistics plays an important role (e.g., China). However, it can only be expected that India will have better performance than most other countries if they continue with their current level of development and progress further in all areas including technology adoption and implementation of new technologies such as artificial intelligence (AI) robots etcetera
So, can India become a global leader in logistics? The answer is a resounding Yes, but it needs willpower and courage. We need encouragement and support from the government. India’s population has grown significantly over the last few decades, which means there are more people who need goods and services now than ever before. Consumers are willing to spend for quality goods and services. This means we can expect demand for these types of service providers to keep growing.