Logistics is the overall management of the resources the way they are procured, stored

and moved to the locations where they are required. So it is the complete end to end
solution that is being provided to any industry.
Logistics industry in India is very fragmented and dominated by unorganised players as
per the study done by Crisil 99% of the cost incurred in Logistics in India is by the
unorganised players. With a very few players operating in the organised sector we can
say that the industry is in a growth phase and is likely to enter a mature phase with the
different initiatives taken by the government. The industry is facing problems from the
poor infrastructure present in the nation and several other factors like the corruption
prevalent at the tolls, non-uniformity in the tax regimes across the states, the extent of
documentation and the corruption in the Indian system. The industry is highly expectant
of the recently announced GST implementation and the Make in India campaign as
these will boost the manufacturing sector which would have a positive impact on the
Logistics sector. Also the recent announcements in Budget regarding investment of
around 70000cr in Indian infrastructure will also aid the growth of Indian logistics sector
with better roads, ports, etc.
Indian Logistics sector is a $110 billion industry, and as per the reports by Kpmg, Pwc
and Crisil the sector is poised to grow at a rate of around 10 15 percent over the next
few years and there have been a very ambitious projection of the sector growing faster
than 20% has been made by the management of few of the leading logistics firms in
India. This growth rate is based on the expectation that the new government will soon
implement the GST regime and the logistics companies can optimize their operations to
reduce cost and increase their margins. With the implementation of GST, the logistics
companies, which are currently forced to set up many small warehouses across multiple
cities can set up just a few, big warehouses region wise and can follow the hub-andspoke model for freight movement from the warehouses to the different manufacturing
plants, wholesale outlets, retail outlets and the various POS. This growth is also backed
by the boom in the e-commerce sector and expansionary policies of the FMCG firms. This
has increased the service geography of the logistics firms but they also have to meet the
demands of quick delivery and tight service level agreements.
The Indian logistics industry spends around 14% of the GDP on different types of cost
incurred in logistics operation. The amount of cost incurred is very high in comparison to
the logistics cost incurred by different nations. The logistics firms are moving from a
traditional setup to the integration of IT and technology to their operations to reduce the
costs incurred as well as to meet the service demands. The industry as a whole has
moved from being just service provider to the positon where they provide end to end
supply chain solutions to their customers.
However there remain many key pain areas for the sector like the disproportionate road
infrastructure development across all parts of India. The states like those of the north
east and the states like HP, UP, Chhattisgarh, etc. do not have all weather roads and
broad gauge railways in comparison to the states like Gujarat, Maharashtra, Karnataka,
etc. where roads and the railways are properly developed. The land acquisition policies of
the government have restricted many firms from setting up of warehouses to store
products. These factors have led to the decrease in the operational efficiency of the firm
along with wastage and loss in the quality of products.
In spite of the many difficulties the sector looks stable and promising with a very high
growth prospect in the near future.