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Logistics is at the Brink of Transformation in India

Several small players have long dominated logistics in India. But now, tech startups are transforming this conventionally-run Industry with their disruptive concepts and approaches.

During Budget 2019, Indian customs announced their plans to digitize its transactions entirely and also utilize RFID technology to advance export logistics. Such announcements, along with few other crucial developments such as a substantial increase in the number of tech-focused startups and grant of 'infrastructure status to the logistics sector, have spelled 'Great News' for the Indian logistics industry.

Ecommerce: pushing the transformation ahead

Since the past few years, with eCommerce tapping the market potential of the country, logistics has witnessed escalating growth.

The expansion story of eCommerce during the last five years is nothing short of a mermaid story. Together with its growing adoption, eCommerce has remarkably promoted the logistics sector's prospects. It's further complemented with the implementation of GST, which compacts the tax structure and seamless movement of products.

Note: According to Economic Survey 2017-18, the Indian logistics market is forecast to reach about $215 billion in 2020, increasing at a CAGR of 10.5 percent.

Additionally, this immense growth is driven by a corresponding increase in demand by emerging e-commerce retailers based in Tier II and III markets. Also, triggered by the upward motion of India in the Ease of Doing Business Index, international corporates have entered the FMCG sector in the Indian market.

Being blessed with a favorable regulatory environment, and supported by the availability of striking infrastructure; Indian logistics businesses (small and large inclusive) can now have easier access to drive the technology-driven operational transformation.

Current Scenario of Logistics

An important thing to be noted is the logistics industry in India has witnessed increasing growth. The growth would, nevertheless, successfully keep the price of logistics beyond the limelight. On the flip side, the entire cost to GDP of the US logistics industry is around 9.5percent, and of Germany is about 8%. Whereas, on the other hand, India's logistics price accounts for approximately 14% of its GDP, i.e., around $309 billion.

These stats indicate that the cost of logistics in India is high leading to uncompetitive exports and more expensive products. With GST (Goods and Services Tax) on the horizon, it's expected to bring an economic upswing to the country. A survey of the second half of last year i.e., 2018-19, indicated that the logistics sector currently employs more than 8.24 million in the country.

Note: The TeamLease Services biannual 'Employment Outlook' report for the April-September 2019-20 predicted that the logistic Industry would observe a rise of 3 percent adding 1.49 lakh jobs

As the findings of the report, as mentioned above, with approximately 31,480 new employment opportunities, logistics companies in Mumbai tops the list. Consequently, Mumbai emerges as the town with promising opportunities for talents in the logistics sector.