India’s logistics sector is witnessing a remarkable growth trajectory, with projections indicating an impressive compound annual growth rate (CAGR) of 11% leading up to FY2027, according to a recent report by Rubix Data Sciences. The report estimates that the sector will burgeon to a staggering USD 468 billion by this timeframe, owing to several strategic developments and infrastructural investments. This burgeoning growth is largely influenced by the dominant role of road transportation, which accounts for over 60% of the logistics market. The substantial 500% increase in the budget allocation for road transport and highways since 2014 is transforming the country’s logistical framework. Improved infrastructure is not only bridging gaps but is also anticipated to save up to Rs. 4.8 trillion annually in logistics costs.
Moreover, the railways, another crucial segment of India’s logistics landscape, have recorded notable advancements. Railway freight loading has shown consistent growth at a 5% CAGR from FY2018 to FY2024, reaching an impressive 1,591 million tonnes in FY2024. This enhanced capacity underscores a robust and expanding rail network, which when integrated with an efficient road system, holds the potential to significantly enhance India’s overall logistics efficiency. However, despite these advancements, the sector is not without its challenges. India’s infrastructure spending as a percentage of GDP remains low at 3.2%, juxtaposed with high logistics expenditure constituting 13% to 14% of the GDP. These financial dynamics illustrate the pressing need for sustained and increased investment in infrastructure to further bolster efficiency and growth.
Strategic Investments and Challenges
India’s logistics sector is experiencing dramatic growth, with a projected compound annual growth rate (CAGR) of 11% up to FY2027, states a Rubix Data Sciences report. The sector is expected to reach an impressive USD 468 billion by this period due to strategic developments and infrastructural investments. Road transportation, dominating over 60% of the market, plays a pivotal role. A notable 500% increase in the budget for road transport and highways since 2014 is significantly enhancing the logistical framework, promising to save up to Rs. 4.8 trillion annually in logistics costs.
Railways, another vital component of India’s logistics, have also advanced, with railway freight loading growing at a 5% CAGR from FY2018 to FY2024, achieving 1,591 million tonnes in FY2024. The expanded rail capacity, combined with an efficient road system, could dramatically improve India’s logistics efficiency. Despite these strides, the sector faces challenges. Infrastructure spending as a percentage of GDP is just 3.2%, while logistics expenses account for 13%-14% of GDP. This disparity highlights the urgent need for sustained and increased investment in infrastructure to continue driving growth and efficiency.
