New Delhi: A recovery in demand along with reforms and construction of supporting infrastructure is expected to grow India’s logistics sector by 10-12% CAGR.
At present, the Indian logistics market is valued at $ 250 billion.
Growth is expected to be supported by the shift from the organized to the unorganized sector (90 percent currently).
According to Motilal Oswal Financial Services, the demand for value-added services is also on the rise.
“Most of the logistics expenses are for transport, followed by the warehouse.”
“Based on the reforms undertaken in recent years, the industry is expected to grow faster over the next few years. Some new business models like a3PL ‘and aExpress Logistics’ would grow faster than the industry as a whole.”
As a result, the brokerage said that, spurred on by reforms such as the GST and the construction of supporting infrastructure, the perspective of logistics would shift from a simple transport to a specialized function.
“The transport industry is very poorly organized with several small operators of local fleets. With the GST taxing all levels of value added, the industry would gradually move towards formalization.”
“The higher levels of GST compliance, along with reduced cost competitiveness, would lead to the withdrawal of smaller players from the system and the shift in market share to organized players. “
In addition, he predicted that organized players with large warehousing capacity and able to invest would see solid market share gains in the future.
In addition, he said that the e-commerce and organized retail industry has accelerated the growth of the a3PL ‘market in India.
This segment was largely dominated by the automotive sector, where there is a strong demand for warehousing and transportation.
In recent years, the “3PL” segment is estimated to have recorded over 20% CAGR, with increasing customer adoption and more players entering this space.