Evolving landscape of warehousing and logistics in India: A road to becoming third-largest economy by 2027
India aspires to become the third-largest economy of the world by 2027, and to achieve this goal the country needs to increase production capacity, optimise infrastructure efficiency, and address domestic and global demands. Currently, the global demand outlook is favourable, presenting Indian businesses with the opportunity to enhance supply-side indicators and compete on a global scale. The manufacturing sector, contributing approximately 17% to the GDP, is expected to play an even more substantial role in the future, supported by initiatives such as Production linked incentive (PLI) scheme, Make in India, Atmanirbhar Bharat, and Skill India, which is expected to drive industrial growth.
However, the increase in production will create additional strain on logistics infrastructure, demanding enhanced efficiency and availability to maintain competitive logistics costs. The logistics sector is already growing steadily at a rate of 10–12% YoY, contributing 14.4% to India's GDP and employing more than 20 million people. The warehousing storage sector is growing even more rapidly, projecting a CAGR of 15.64% and a market size of USD 35 billion by 2027.
Despite this growth, the logistics sector faces challenges such as unfavourable inter-modal mix, inefficient fleet usage, material handling inefficiencies, road congestion, and procedural bottlenecks. The Government has taken significant steps to address these issues, including establishing multi-modal logistics parks (MMLPs), aggregation/disaggregation centres, and advanced warehousing facilities. The PM Gati Shakti program specifically focuses on enhancing roads, railways, ports, and airways, with special attention to congestion-free logistics infrastructure.
Regulatory measures, including the GST Act, National Logistics Policy, and warehouse standardisation, have further strengthened the logistics and warehousing sector. Technology interventions have improved procedural efficiencies, and there is a notable shift in warehousing demand towards Tier 2 and 3 cities driven by 3PL and e-commerce players.
Furthermore, businesses are adopting green logistics initiatives, creating opportunities for renewable energies and contributing to India's target of achieving a net-zero carbon footprint by 2070.
To conclude, this knowledge report provides valuable insights into the market outlook, key trends, challenges, opportunities, government policies, and technological advancements in India's warehousing and logistics industry. The growth of this sector is likely to support India's journey to become a prominent player in the global economy.
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