The State of Indian Logistics in FY23

In fiscal year 2022-23 (FY23), India's nominal GDP was estimated at $3.3 trillion, reflecting a growth rate of 16.1% compared to the previous fiscal year.
Regarding logistics spending, it's generally estimated that logistics costs account for about 14% of India's GDP.

The logistics sector in India has shown a consistent growth pattern, influenced by factors such as the expansion of e-commerce, government initiatives like the Make in India campaign, and improvements in infrastructure​ (IMARC)​​ (Mordor Intel)​.

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Breakup by Transportation Mode

Below is the table that breaks down India's logistics market by transportation mode, based on available data:

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These percentages are approximations based on the typical distribution of transportation modes in logistics in India. Road transport holds the largest share due to its accessibility and coverage, which allows for last-mile connectivity. Rail transport is significant for heavy and bulk transport over long distances, while air transport is less common due to its cost but is crucial for time-sensitive shipments. Water transport is used especially for international shipping and heavy bulk goods due to its cost-effectiveness. This distribution reflects the diversified nature of the logistics needs across the country.

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By Unit Economics

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To provide a table breaking down the average manufacturing spend by department, including logistics, we'd have to make some general assumptions based on typical manufacturing industry practices.  

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These percentages are typical estimates and can vary significantly depending on the specific industry, scale of operations, geographic location, and company strategy. The production usually takes the largest share of costs, reflecting raw material, labor, and machine costs. Logistics expenses can also be significant, covering all aspects related to the transportation, storage, and distribution of products. Other departments like R&D, marketing, and administrative functions contribute to smaller but essential parts of the cost structure in a manufacturing company.

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By Type of Operations

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Below is a table that outlines a typical breakup of the logistics market by mile type for the last year, based on common industry practices:

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First Mile: Refers to the transport of goods from a manufacturer or supplier to a warehouse or distribution center. This stage often involves bulk transport.

Mid Mile: This stage involves moving goods from the initial warehouse or distribution center to another warehouse or distribution center closer to the customer, often crossing regional boundaries.

Last Mile: This is the final step in the delivery process, where goods are delivered to the end customer. This stage is critical for customer satisfaction and tends to be the most expensive part of the logistics chain due to its complexity in reaching individual destinations.

These percentages are approximations and can vary significantly depending on factors such as the specific industry sector, geographic characteristics of the market, and individual business models. Last-mile logistics is particularly notable for its higher relative cost due to the complexities involved in delivering to diverse and often congested urban locations.

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Seasonal Trends

These trends are hypothetical and based on typical patterns observed in the logistics sector, such as seasonal demand variations related to holidays, financial year dynamics, and the agricultural cycle in India. This cyclical nature affects logistics demands significantly, with peaks typically around the times when consumer spending is high and during major festivals, and troughs generally in the monsoon season when transportation can be challenging.

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These percentages are assumptions to give a sense of potential fluctuations in logistics activities throughout the year based on seasonal demand patterns. Actual figures can vary widely depending on specific industry sectors, regional market conditions, and external economic factors.

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Breakup by State

The logistics market in India is segmented regionally into North India, South India, East India, and West India. Each region contributes differently to the logistics market, influenced by factors like industrial activity, infrastructure development, and regional economic policies.

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These contributions are reflective of the geographical advantages, economic activities, and infrastructure developments unique to each region. West and North India typically have higher logistics activities due to major industrial and commercial centers like Mumbai, Delhi, and Gujarat which foster robust demand for logistics services.

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