The logistics and warehousing sector is a cornerstone of India’s economy, underpinning trade and various industrial activities. This sector’s evolution has been propelled by several critical factors that businesses must understand to remain competitive and leverage emerging opportunities. Here are the top five drivers propelling the growth of the logistics and warehousing industry in India.
India is increasingly becoming a viable alternative to China as a global manufacturing hub. The government’s “Make in India” initiative aims to transform the nation into a global design and manufacturing centre. This program encourages both multinational and domestic companies to manufacture their products within the country, leveraging India’s large, skilled workforce, cost advantages, and strategic location. Consequently, the demand for efficient logistics and warehousing solutions has surged, driven by the need to support burgeoning manufacturing activities. This demand is reflected in the substantial growth projections for India’s logistics market, valued at approximately USD 274 billion in 2022 and expected to reach USD 563 billion by 2030, growing at a compound annual growth rate (CAGR) of 15.5 per cent.
Governments worldwide recognise the critical role of logistics and warehousing in economic growth, leading to increased investments in infrastructure development. These projects include expanding road networks, upgrading ports and airports, and developing dedicated freight corridors. India boasts the second-largest road network globally, covering around 6.7 million kilometres. The National Highway network grew by 60 per cent from 2014 to 2023, with significant expansions in four-lane highways. Investments in digital infrastructure, such as fibre optic networks and cloud computing, are also crucial for enabling real-time tracking and data analysis in the logistics sector. Improved connectivity and efficient transportation networks foster a conducive environment for the logistics and warehousing industry to thrive.
The rapid growth of e-commerce and quick commerce has significantly transformed consumer buying behaviour, with the Indian warehouse market projected to reach USD 34.99 billion by 2027, growing at a CAGR of 15.64 per cent from 2022. Modern consumers expect faster delivery times, wider product selections, and convenient return options, necessitating agile and responsive logistics networks. Warehouses are evolving into fulfilment centres equipped with advanced technology like automation and order management systems. The concept of same-day and next-day delivery is becoming increasingly common, placing immense pressure on logistics providers to optimise their operations and invest heavily in logistics infrastructure to meet consumer expectations.
India’s increasing household income and purchasing power have significantly contributed to the growth of the logistics and warehousing industry. As more people enter the middle class and disposable incomes rise, there is a corresponding increase in consumption. This surge in demand for consumer goods requires robust logistics and warehousing systems to ensure products are available where and when needed. The sector’s contribution to India’s GDP is about 14.4 per cent, reflecting its critical economic role. Employing over 20 million people, the logistics and warehousing sector supports economic activities and generates livelihoods. As purchasing power continues to rise, the industry will need to scale accordingly to meet growing demand.
The demand for multi-location warehouses has increased significantly, driven by changing consumer expectations and the swift expansion of e-commerce. Strategically located warehouses minimise delivery times and reduce operational costs, addressing the need for quicker shipping and better inventory management. However, maintaining separate warehouses in multiple cities can be financially and logistically challenging for many brands. Multi-client warehouses offer an effective solution by allowing several manufacturers to share space and resources. This model boosts efficiency and ensures faster deliveries, emerging as a crucial growth driver in the logistics and warehousing industry.
The logistics and warehousing industry in India is undergoing a rapid transformation driven by several key factors. The rise of India as a manufacturing hub, changes in consumer behaviour due to the e-commerce boom, increasing purchasing power, demand for multi-client warehouses, and significant infrastructural development collectively contribute to the sector’s robust growth. With the market expected to grow at a CAGR of 15.5 per cent by 2030, these drivers offer numerous opportunities for businesses to innovate and expand. Staying attuned to these key drivers will be crucial for companies looking to thrive in this dynamic and evolving industry. As the sector continues to evolve, businesses that adapt to these changes and invest in efficient logistics and warehousing solutions will be well-positioned to capitalise on the growth opportunities presented by this burgeoning market.
