India: Evolution of Integrated Logistics

India’s logistics sector was valued at US$ 160 billion in 2018 and is expected to grow to US$ 215 billion by 2022. Today, almost 90% of cargo movement is handled by roadways and railways in the country. Globally, India has the 2nd largest road network and the 3rd largest rail network. It enjoys a 7,516 km long coastline and 18,000 km of inland waterways.

Optimum use of major physical infrastructure, appropriate positioning of intermediate logistic frameworks and seamless convergence of all stakeholders will help in achieving cost and time efficiency as well as minimization of in-transit losses which is currently, 40% of agriculture production.

Over the last decade, the logistics sector has witnessed significant focus from Central and State governments to improve efficiency.

Key improvement initiatives kicked off with development of 5,846 km seamless road connectivity under the Golden Quadrilateral and proposal of dedicated rail corridor connectivity initiatives, such as 3,200 km Dedicated Freight Corridor (Western and Eastern).

Central initiatives such as, Bharatmala and Sagarmala with investment of US$ 220 billion, are some of other major steps to integrate logistics infrastructure. In addition, the upcoming National Logistics Policy is likely to be another catalyst to boost the sector with multi modal connectivity, technology driven monitoring and standardization. To avail optimum use of this major infrastructure, hinterland logistics framework and facilities are essential. These include the Multi Modal Logistics Park / Zone, SEZ and FTWZ, Warehouse, Industrial Zone/ Park, Container Freight Station/ Inland Container Depot, Private Freight Terminal and Coldstorage/ chain facilities. The sector deserves more focus on reducing road dependency from 60% to global average of 30%-40% in modal transport by creating more rail linked/ multi modal hinterland logistics infrastructure.

The logistics sector in India has seen extraordinary growth from 2010 to 2018. The overall warehousing stock in the top 8 cities in the country has increased by almost 3 times during the same period. We also see an increasing focus on Grade A warehousing developments in comparison to the Grade B developments which were seen around 2010. We estimate that warehousing stock in the top 8 cities in India would reach 344 mn sq ft by 2022 from the earlier 169 mn sq ft in 2018.

Through this report we provide stakeholders with not only a wholesome view of the past, but also an idea of what lies ahead from the policy as well as the real estate perspective. In addition, it critically appraises the central and state logistics policies, which are likely to be the guiding factor behind the industry’s growth going forward.

We expect the sector to attract more investments in the near future and see promising times for hinterland logistics and specialised storage facilities.