The Government of India’s focus on ‘Make
in India’ has resulted in boosting domestic production which in turn bolsters
up the logistics industry, says Frost &
report named ‘Indian Logistics Industry - Growth Insights and Forecast to
To keep abreast with this phenomenon of
growth, the logistics companies resort to digitizing their solutions and
providing online freight services which tend to transform the very supply chain
into an organized industry.
Some of the advanced technologies adopted
include automated storage and retrieval systems (ASRS) in warehouse and
transportation, radio frequency identification (RFID) in place of bar codes,
and global positioning system (GPS) for real-time tracking.
“In addition to riding the digital wave, logistics companies in India are
strategizing for the transition from indirect taxation to goods and service tax
(GST). The simplified tax structure will benefit the warehousing industry and
reduce logistics costs by upto 2.5 percent,” said Senthil Kumar Subbiah, research
analyst, supply chain & logistics transformation practice, Frost &
Sullivan. “This tax reform, along with land and labor market reforms, will
improve the efficiency of both transportation and freight forwarding.”
The report is part of the Supply Chain & Logistics Transformation team’s
Growth Partnership Subscription. According to the study, investments in
infrastructure development across all modes of transportation, relaxed foreign
direct investment regulations, implementation of GST, and increased technology
adoption are altering the Indian logistics industry.
Meanwhile, the increasing influx of international logistics service providers
(LSPs) are prompting third-party logistics (3PLs) and domestic LSPs to expand
their footprint and focus on transportation service, warehousing and freight
forwarding. It will also open up opportunities for partnerships, and domestic
logistics companies will have access to the modern technologies introduced by
global service providers. Logistics services in India will greatly benefit from
the development of transportation and logistics-related infrastructure, such as
dedicated freight corridors, logistics parks, free-trade warehousing zones,
port modernization, and container freight stations.
“Another major influence on the logistics industry is the ubiquity of smart
phones and internet, and the consequent rise of e-Commerce. As more than 30
percent of the Indian population resides in tier II and tier III cities,
e-Commerce sites receive more orders from these cities,” noted Subbiah. “To
provide better services to customers, e-Commerce firms are demanding bigger and
more efficient warehouses, faster delivery options and improved last-mile
connectivity, which translates to a plethora of business opportunities for 3PL
companies and logistics startups.”
Overall, LSPs are leveraging technologies such as Big Data and cloud-based
application platforms for better order fulfillment and tracking of shipments.
The modernization of logistics infrastructure and government support will go a
long way in advancing the Indian logistics industry.