With the Indian economy opening to the world, the logistics industry has emerged as a critical enabler for trade and commerce. Today, the industry is projected to experience a compound annual growth rate (CAGR) of 10-12%, supported by policy changes and infrastructure upgrades. This growth is expected to enhance India’s competitiveness, with the logistics market projected to reach $380 billion by FY25.
In 2022, the Indian air cargo market generated 2.2 million tonnes of traffic, with about 30 percent of the traffic generated in the domestic and the remainder in the international sectors. EY has projected India to become a $26 trillion economy by 2047 and the air cargo industry is well placed to help the country achieve this target.
In recent years, international trade has faced numerous challenges, and ongoing volatility can naturally lead to uncertainty. However, that should not lead to protectionism. On the contrary, we need more integration and cooperation to maintain global trade stability.
In fact, according to a Trade Growth Atlas report, international trade in goods has surpassed pre-pandemic levels by as much as 10%, despite the various supply chain issues. Notwithstanding the challenging macroeconomic conditions, the prospects for future trade growth are positive, and I believe trade will grow slightly faster in the coming years.
Express logistics industry’s potential goes beyond its economic impact If we take the example of the pandemic, it created an acute need for medical supplies, leading to a huge surge in imports of COVID-19 related emergency products from the USA, the European Union and China. Logistics companies became increasingly important in ensuring the timely and efficient delivery of goods to customers worldwide. Logistics companies focused on implementing digital-first processes, ensuring operational excellence, providing seamless customer experience interfaces, and integrating e-commerce with the export-import (EXIM) trade ecosystem. As a result, they were able to facilitate the movement of goods and essential supplies, including vaccines, medical equipment, and food items.India has been a focus for logistics players and companies across the world in recent years, with significant investment plans and new product offerings. The Indian government has introduced various initiatives and schemes such as Make in India, Start-up India, and the Production Linked Incentive Scheme to attract large firms and make India a part of the global value chain.
Overcoming the challenges in the logistics industry
According to the Express Delivery Services – Supporting the Journey towards India@2047 report, the industry is expected to grow by 21% annually due to the focus on the logistics sector under the PM Gati Shakti-National Master Plan for multi-modal connectivity and the National Logistics Policy. Trade agreements with key export markets and government support for onboarding MSMEs to digital platforms are also expected to lead to a manifold increase in exports.
However, India’s growth agenda faces several challenges, including improving the ease of doing business, implementing sustainability-led models, addressing logistical challenges, and overcoming infrastructural and connectivity issues. To improve the ease of doing business, the Indian government needs to undertake more reforms to simplify regulations, reduce bureaucratic hurdles, and enhance transparency in decision-making. Furthermore, sustainability is crucial for India’s long-term growth and involves investing in initiatives such as alternative fuels, route optimisation, intermodal transport, sustainable packaging, and carbon insetting programs.
The recently released Global Connectedness Index 2022 report indicates a strong ecosystem for cross-border e-commerce that augurs well for India’s economic growth especially given the rising number of MSMEs. While this is a great opportunity for India to strengthen its position in the global marketplace, its ability to be ‘competitive’ will determine its success. This is how logistics providers are playing a crucial role in bolstering India’s position as a key trade and logistics hub by leveraging their extensive knowledge, expansive networks, and advanced operations. These industry players contribute to the development of a resilient, efficient, streamlined, and adaptable EXIM (Export-Import) ecosystem.
The writer is SVP South Asia, DHL Express
