July10 , 2025

    Several structural, operational and systemic challenges continue to hold back full potential of logistics sector: Report

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    India’s logistics sector stands at a critical inflection point, with massive potential supported by growing trade volumes, policy reforms, and a thriving e-commerce landscape. However, several structural, operational, and systemic challenges continue to hold back its full potential, says a report by SICCI on Innovation and Tech Automation in Shipping and Logistics.

    India’s logistics cost accounts for 13-14 per cent of its GDP, significantly higher than the global average of 8 per cent. This cost burden directly impacts business margins, reduces global competitiveness, and makes Indian exports less viable in international markets. The Indian supply chain remains disconnected and siloed, with poor coordination among suppliers, distributors, platforms, and transporters. This fragmentation leads to delays, inventory pile-ups, and lack of real-time tracking, turning logistics into a guessing game rather than a streamlined operation, the report said.

    State-level variation in logistics regulations-including documentation, permits, labour compliance, and vehicle entry rules-leads to border delays, compliance overheads, and extended transit times. The lack of standardisation impairs seamless inter-state movement. The absence of real-time data sharing and centralized tracking undermines operational efficiency. It leads to missed deadlines, customer dissatisfaction, and supply chain disruptions, especially during high-demand periods, the report said.

    The report recommended to introduce Performance-Linked Incentives (PLIs) for logistics players who adopt cost saving innovations like route optimization, fleet-sharing, and load consolidation. It also recommended to subsidize multimodal transport adoption, especially rail and inland waterways, to shift from costlier road freight and implement a National Logistics Efficiency Index, tied to fiscal incentives for states and operators that show measurable improvements.

    The report was released at the Southern Regional Shipping Conclave (6th edition) organised jointly by The Southern India Chamber of Commerce and Industry jointly with the Association of Multimodal Transport Operators of India on Thursday.

    On improving the last mile connectivity infrastructure and connectivity, the report recommended allocation of funds under PM Gati Shakti specifically for rural last-mile infrastructure including feeder roads, local warehouses, and digital kiosks. The report also urged establishing logistics technology incubation hubs in partnership with premier institutions like IITs and IIMs to support innovation and training.

    Clear Vision

    With clear vision, strategic infrastructure and a tech-driven mindset, Tamil Nadu is not just keeping pace but it is leading India’s logistics transformation. As the State prepares for a more connected, resilient, and sustainable logistics future, the collective efforts of policymakers, logistics players, and investors will be key.

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