India’s Logistics Sector
For any international business, logistics plays a crucial role in global supply chain management. It includes order processing, transportation, inventory, and warehouse management, along with resolving customer queries and forecasting demand.
Now, to ensure that all these aspects get properly taken care of, the countries in which multinational corporations run operations must have a well-developed logistics sector. In this regard, India’s Logistics Sector is a noteworthy example.
As per a survey, by 2030, this industry segment is estimated to reach USD 563 billion, indicating a 9.4% CAGR. Thus, companies planning to shift their operations to a country with a robust logistics landscape can consider India as a viable option.
Keep reading this blog to learn more.
Overview of India’s Logistics Sector
India’s Logistics Sector occupies the 38th rank out of 139 as per the 2023 Logistics Performance Index. It contributes to approximately 14.4% of the country’s GDP and employs more than 22 million individuals.
As India keeps growing as an economy, its logistics sector is also expanding in tandem to serve its needs. On 17th September 2022, Prime Minister, Narendra Modi, introduced the National Logistics Policy (NLP). The main aim behind this move was to lower existing logistics costs by 13% to 14% and keep them similar to other developed nations.
It will help increase the competitiveness of Indian goods both in the domestic and international markets, making it easier for multinational businesses to sustainably run their operations. The policy also aims to increase this sector’s efficiency by creating a multi-jurisdictional framework that covers all industrial segments.
Additionally, the NLP focuses on developing infrastructure that is at par with global standards. Thus, foreign companies can leverage the Indian logistics sector’s lower costs, developing infrastructure and the country’s strategic position in the Trans-Indian Ocean routes to establish their businesses worldwide.
Key Features of India’s Logistics Sector & How it Affects Supply Chain
Listed below are the key features of the Indian logistics sector along with the ways it affects the supply chain
- Warehousing & Distribution
Warehousing refers to the stage in a supply chain in which physical inventory is temporarily stored before distribution. Indian warehousing firms are slowly shifting to the hub-and-spoke model. They are also adopting technological integrations to simplify operations and increase their ease, sustainability, and efficiency.
E-commerce companies and third-party logistics providers are the key players in this industry. They are consistently increasing their presence in Tier 2 and 3 cities thus enhancing their control over the secondary market.
Coming to distribution, Indian logistics organizations provide services in almost all corners of the country. They have direct, indirect, and hybrid distribution channels, enabling companies to choose depending on their marketing and product distribution strategies.
- International Shipping
When it comes to international shipping, the Indian logistics industry has a clear advantage. The country is present at a strategically advantageous point in the Trans Indian Ocean routes, that connect East Asia with the European nations and Africa.
Additionally, India has an expansive coastline of approximately 7,500 kilometers, consisting of 12 main ports and 187 minor ports. Apart from this, firms also have the option of shipping via air freight to any part of the world.
- India’s E-commerce Sector
Nowadays, thanks to the advent of smartphones and rapid digitalization, an increasing number of consumers prefer buying products online. They also demand ease of returns, last-mile connectivity, and other value-added services.
This has led to the rise of several Direct-to-Consumer (D2C) brands, which demand end-to-end logistics services to meet the needs of their customers. As a result, there has been a significant rise in omnichannel retailing, creating a demand for several warehouses.
All these factors have had a direct impact on logistics and supply chain management, requiring shipping companies to develop new strategies. They have started adopting new technologies, which can improve delivery time, accuracy, and transparency, along with predicting future demand.
In the long run, the Indian e-commerce sector will continue impacting the logistics segment and being a key driver behind its growth.
- Green Logistics
As per experts, the shipping industry is responsible for around 3% of global emissions. Thus, the Indian logistics sector is adopting green logistics. It is a practice of using optimized packaging, green warehouses, electric vehicles, IoT sensors, and solar power to reduce carbon emissions.
This is good news for international firms who have stringent ESG requirements or wish to go carbon neutral in the near future.
- India’s Manufacturing Sector
Another factor that will drive the Indian logistics sector’s growth is the country’s manufacturing industry. The ‘Make In India’ initiative, which aims to make this country a global manufacturing destination has significant potential in increasing its exports. However, to support this growth, the logistics sector needs to expand in tandem.
Thus, foreign companies with a global clientele can reap the benefits of India’s developing logistics scenario and spread their business worldwide.
How Selecting the Right Supply Chain Partner Can Help Foreign Businesses?
Choosing the right supply chain partner has several benefits for businesses. Some of them are as follows:
- Increasing the reach of their business in their target market.
- Streamlining their supply chain and facilitating fast, safe, and accurate deliveries.
- Up or down-scaling operations as per seasonal requirements.
- Accurate forecasting of consumer demand.
- Improvement of overall operational efficiency.
Now, choosing the right supply chain partner for a company that does not have prior experience in operating in the Indian logistics sector can be a difficult task. In this regard, partnering with a supply chain consulting firm like Tecnova can be a smart move.
They have the needed technology, expertise, methodologies, and industry experience to perform supply chain optimization for clients and help achieve their desired outcomes.
Takeaway
For multinational businesses, robust logistics is a must. Thus, they need to set up operations in a country where the logistics market has potential for development. In this vein, the Indian logistics sector can be an ideal choice. Thanks to the country’s continuously expanding e-commerce and manufacturing sectors, the logistics industry is growing in tandem, resulting in faster, safer, and more accurate deliveries.
However, to ensure that firms choose the right logistics partner, opting for supply chain consulting services is a must. Organizations like Tecnova can be really handy in this regard. They have adequate knowledge of the market, along with the required expertise and technology to set up supply chains for a variety of clients.
Reference
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