India’s logistics sector accelerates its transformation with digital and infrastructure initiatives

India’s logistics industry, valued at over US$215 billion, is undergoing a rapid transformation driven by government reforms, digital innovation, and expanding e-commerce, positioning it as a key driver of the country’s economic growth and employment prospects.

India’s logistics sector, valued at approximately US$215 billion in 2021, is experiencing rapid and sustained growth, with government projections indicating a compound annual growth rate (CAGR) of 10.7% thr...

ough 2026. This growth positions logistics not just as a service mechanism but as a cornerstone of India’s broader economic expansion, playing a critical role in the digital commerce revolution and employment generation.

A detailed KPMG India report highlights that since 2017, the sector has maintained a robust CAGR of 12–15%, propelled by three main drivers: the explosive rise of e-commerce, the expanding international ambitions of Micro, Small & Medium Enterprises (MSMEs), and an intensified national push towards digital transformation. The logistics ecosystem in India today spans sophisticated cargo handling, multi-modal transportation, advanced warehousing, last-mile delivery, and intricate customs clearance procedures, forming an essential supply chain backbone.

Key trends reshaping the industry include consolidation among smaller players to improve scale, agility in business models to adapt swiftly, relentless digital innovation encompassing data-driven automation, and an increased focus on sustainability to meet both environmental objectives and operational efficiency. These factors combine with progressive government reforms aimed at modernising infrastructure and regulatory frameworks.

Government initiatives such as the National Logistics Policy and the PM Gati Shakti Master Plan are crucial to this transformation. These policies foster a coordinated infrastructure development approach enhancing roadways, railways, ports, and digital systems. Specifically, the government’s plan to establish 50 E-commerce Export Hubs (ECEHs) over the next five years under a Public-Private Partnership (PPP) framework is designed to streamline the export processes for digital sellers. These hubs will combine warehousing with integrated fulfilment and customs clearance facilities, easing the export journey for MSMEs and e-commerce businesses.

The logistics sector’s transformation is especially visible in road transportation, which today carries about 70% of domestic cargo volumes—an impressive shift from the dominance of air freight a decade ago. Industry leaders underscore this as a defining change that makes logistics more cost-effective and accessible across regions. Despite this, air cargo remains vital for high-value and urgent shipments, with major airports like Delhi and Bengaluru leading in capacity and handling.

A major leap forward has come from digitalisation efforts, particularly the launch of the Express Cargo Clearance System (ECCS) in 2017, which digitised customs clearance for express cargo. This system has eliminated massive paper-based bottlenecks and introduced pre-clearance capabilities, allowing for quicker, transparent, and more secure customs processing. Although the volume growth of shipments through ECCS has been more gradual, the platform remains essential for speeding up logistics operations.

The government’s Open Network for Digital Commerce (ONDC) initiative aims to democratise access to e-commerce logistics by connecting sellers and logistics providers on a transparent platform. This is projected to significantly increase shipments through the network, reflecting the broader trends of faster growth in business-to-consumer (B2C) and consumer-to-consumer (C2C) segments, which have overtaken traditional business-to-business (B2B) logistics in volume share.

Artificial Intelligence (AI) and automation are also transforming the sector. Logistics companies are investing heavily in AI to predict demand surges and optimise resource allocation, particularly during spikes caused by festivals or unpredictable events. Automation technologies, including robotics and automated sorting systems, are steadily being adopted in warehouses and processing hubs, although full-scale integration is still catching up with international benchmarks.

The sector supports over 22 million people, and reports forecast that it will continue to generate millions of new jobs, potentially doubling certain segments such as express logistics by 2030. India’s express logistics industry, valued at around US$9 billion in FY25, is expected to nearly double to between US$18 and US$22 billion by FY30, creating 6.5 to 7.5 million jobs. This sub-sector alone contributes significantly to government revenue through GST and customs duties.

Despite its strong performance and future potential, the logistics sector faces ongoing challenges. Infrastructure gaps, customs bottlenecks, and the complexities of integrating freight movement in congested urban areas remain issues requiring focused attention. However, with continued government support, technological innovation, and strategic business adaptations, India’s logistics sector is well-positioned to sustain its trajectory as a vital pillar of the country’s economic ambitions, seamlessly connecting businesses, markets, and consumers in what is being described as a logistics revolution powering a $215 billion economy.

Source: Noah Wire Services