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BUSINESS EYE OCTOBER 04, 2024 | The Indian Eye 36

How structural shifts and tech

will lead to Indian logistics market

to Rs 13.4 trillion

India’s logistics cost as a percentage of GDP currently stands at 14 per cent, significantly

higher than the 8-9 per cent range in developed countries

OUR BUREAU waterways, and dedicated freight
corridors (DFCs).
Mumbai
These measures are expected
he Indian logistics market, val- to reduce the logistics cost-to-GDP
ued at Rs 9 trillion in FY23, is ratio to 8-9 per cent in the coming
Tprojected to grow significant- years, aligning India with global
ly, reaching Rs 13.4 trillion by FY28, standards.
registering a compounded annual The logistics market is highly di-
growth rate (CAGR) of 8-9 per cent, verse, encompassing road transport,
according to a recent report by Moti- rail transport, air cargo, multimodal
lal Oswal. logistics, and industrial warehousing,
This growth is being fueled by among others.
structural shifts, technological ad- The domestic express logis-
vancements, and government initia- tics segment is projected to grow
tives aimed at reducing logistics costs at a faster pace, with a 14 per cent
and improving infrastructure. CAGR over FY23-28, driven largely
The National Logistics Policy, by e-commerce expansion.
unveiled in September 2022, has set Organized players, who already
goals to optimize India’s logistics The logistics market is highly diverse, encompassing road transport, rail transport, air cargo, control about 80 per cent of the
landscape. It has focused on increas- multimodal logistics, and industrial warehousing (ANI/File photo) market, are expected to solidify their
ing the share of railways in the freight dominance, leveraging government
movement (currently at 18 per cent) push for port privatization has led to roads accounting for 71 per cent policies like the e-way bill and GST.
through the development of dedicat- improved infrastructure and efficien- of freight movement, plays a major The less-than-truckload (LTL)
ed freight corridors (DFCs), improv- cy at Indian ports, benefiting major role in these elevated costs. In com- segment in road transportation is
ing road infrastructure, and expand- operators like Adani Ports and SEZ parison, railways and waterways also expected to witness notable
ing inland waterways. (APSEZ) and JSW Infrastructure. have a much smaller share of the growth, with a projected 10 per cent
The commissioning of DFCs, India’s logistics cost as a per- logistics pie. CAGR.
which are 96 per cent complete as of centage of GDP currently stands at To tackle these inefficiencies, the This growth has been spurred
April 2024, is set to boost the capacity 14 per cent, significantly higher than government has implemented key by the increased demand for smaller
and efficiency of rail freight, increas- the 8-9 per cent range in developed initiatives such as the Goods and and more frequent shipments, by-
ing its share in the overall modal mix. countries. Services Tax (GST) and invested passing warehouse storage, and di-
Additionally, the government’s The skewed modal mix, with heavily in road infrastructure, inland rectly reaching retailers.

BRICS+ nations are better prepared for challenges than G7

he BRICS+ group of coun- access to higher primary deficits and cial in shaping global economic trends. in market exchange terms and 27.5
tries are better placed to fis- a nearly equal excess of growth over While G7 nations holds a larger share per cent in PPP terms.
Tcally combat any future ma- interest rates. of global GDP when measured at The report highlighted that over
jor economic crisis, as the countries “BRICS+ group is better placed market exchange rates, the BRICS+ the years, the G7’s share of global
in the BRICS+ group have a lower to fiscally combat any future major group has a significant and growing GDP has steadily declined. In 2002,
debt-GDP ratio, highlighted a re- economic crisis as it has a lower debt- share when evaluated in terms of Pur- the G7 accounted for 64.4 per cent
port by Ernst & Young, an interna- GDP ratio, access to higher primary chasing Power Parity (PPP). of global GDP, but this has fallen to
tional consultation firm. deficit, and a near equal excess of It added that by 2029, BRICS+ an estimated 44.4 per cent in 2024,
The report says that BRICS+ growth over interest rates as com- is projected to have a 29.2 per cent a decline of 20 percentage points.
nations are placed at a stronger fis- pared to the G7 group,” said the re- share of the global GDP in market According to International
cal position than the G7 countries port. exchange terms and 38.3 per cent in Monetary Fund (IMF) projections,
because they have a lower debt- The report emphasized that both PPP terms. In comparison, the G7’s the G7’s share is expected to drop
GDP ratio and benefits of having the G7 and BRICS+ groups are cru- share is expected to be 42.4 per cent further to 42.4 per cent by 2029.

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