Indian Logistics Industry is Growing @ 6 % year on year. Will India continue to support logistics industry in the future period? Ken Research

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1. 1,24,000 Km of rail network with ~10,000 freight trains carrying 3 MT of goods daily.

India Logistics Industry

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65% of domestic freight volume carried through road; high compared to ~50% in developed countries.

  • 8 Mn Km of Road Network; 10,000 Km of National Highways.
  • 1,24,000 Km of rail network with ~10,000 freight trains carrying 3 MT of goods daily (33% of total).
  • Share of rail and road closer to 50%-50% in developed countries as rail freight is cheaper for longer distances.

Dedicated Rail Freight Corridors Project

  • 3,300 km twin corridors (DFCs) to be completed by end of 2021.
  • World Bank funding Eastern DFC with $1.86 Bn; Japan International Cooperation Agency (JICA) $5.2 Bn for the western corridor.
  • Goods train speed to increase from 25kmph to 100kmph with 13,000 tonnes load.
  • 25 times less carbon footprint than road transport.

2. Indian Logistics Industry is Growing significantly with respect to Logistics Sector Growth in Other Neighbouring Countries.

India Logistics Market

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Logistics Performance Index (LPI)

Germany Topped Ranking in World, Vietnam Tops in Lower Middle Income Group

Reasons for Logistics Score

  • High Investments $16.2 Bn annually every year, New Innovation, Govt supported freight villages for logistics support.
  • Advanced Infrastructure, Innovations in the logistics space, and $46.3 Bn investment on infrastructure annually is responsible for high logistics Score.
  • The energy consumption of Australia is highest but Adoption of technologies such as big data and open data is very quick along with government support such as Australia Development Plan.
  • Implementation of Belt and Road Initiative, Huge Exports, high-speed railways, electric vehicles, 5G communications, and cross-border e-commerce are its game changers.
  • Low Score is due to Weak infrastructure, Complex legal framework and Lack of modern information systems.

3. Although trucking industry being significantly impacted by COVID -19 in India there are certain initiatives adopted to improve Situation.

India Logistics Sector

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The government has announced INR 20 Lakhs package providing Collateral free loans which was already existent for transporters but were not aware of it. Around 85% of the truckers are illiterate single truck owners who will not be able to avail benefit of MSME Policy due to its informal nature and want to remain unorganised due to Overloaded trucks, cargo without invoices & bills. The truckers still need to pay expenses after extension of moratorium period and have not been waived off even after no loads on road and no cash for payments. Hence, if a part of premium paid can be refunded to companies, can put some cash in hand of entrepreneurs and will help to bring logistics sector on track.

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