Adoption of technology-driven intra-city goods transportation services has helped nearly 73 per cent of micro, small, and medium enterprises (MSMEs) in India reduce logistics costs, according to a new study by the Centre for Digital Economy Policy Research (C-DEP) and IIT Delhi.
The study, titled ‘Study of Technology-Enabled Intra-City Logistics for MSMEs,’ was released on Tuesday at India Habitat Centre. It found that about 95 per cent of MSMEs reported improved on-time delivery of goods, while more than 61 per cent said digital logistics platforms reduced time spent on coordination and vehicle procurement.
MSMEs account for almost 30 per cent of India’s GDP and around 45 per cent of industrial output. With over 63 million units employing more than 110 million people, these businesses rely heavily on frequent short-distance movement of small consignments within cities. However, they face persistent challenges such as high transport costs, unreliable vehicle availability, and frequent delivery delays.
The report was released by Member of Parliament and CAIT Secretary General Praveen Khandelwal and Swadeshi Jagran Manch Co-Convener Ashwini Mahajan. Khandelwal emphasized that reducing logistics costs is critical for India’s growth ambitions. “A significant part of India’s logistics costs arises from road transport. Improving efficiency in intra-city logistics is essential if India is to bring logistics costs down to 4-5 per cent of GDP,” he said. Mahajan highlighted how MSMEs, supported by India’s growing digital ecosystem, are key to the country’s economic rise.
The study also revealed that 27 per cent of MSMEs expanded their customer base or served wider geographic areas after accessing on-demand logistics services, while 48 per cent primarily used them for urgent or priority shipments.
However, the report raised concerns over regulatory risks under the proposed GST 2.0 framework. It warned that digitally booked intra-city transport could be classified as ‘local delivery services,’ raising GST from 5 per cent to 18 per cent. This could increase per-trip costs by over 12 per cent, disproportionately affecting MSMEs.
C-DEP president Dr Jaijit Bhattacharya cautioned that higher taxes could make these services unaffordable, undermining efficiency gains and customer trust. The report recommended clear GST guidelines, support for formalizing small transporters through digital infrastructure, and targeted incentives to facilitate adoption of electric freight vehicles without raising costs for MSMEs.
