India stands at the threshold of a transformation. With a burgeoning middle class, increasing disposable incomes, and a young population, the country is poised for a retail revolution. Projections indicate a leap to an impressive $2 trillion by 2033, from $820 billion in 2023. E-commerce has a crucial role in this transformation. With rapid digitalisation and growing internet penetration, the Indian e-commerce market is expected to reach $325 billion by 2030.
The retail and e-commerce boom stands on the backbone of logistics and supply chain infrastructure in the country. As we target a $5 trillion economy by 2030, the seamless and efficient movement of goods is essential to meet demand and drive the growth of this sector. This growth, however, hinges on the ability to manage and reduce logistics costs, which currently account for a hefty 11-14 per cent of the Gross Domestic Product (GDP). In comparison, the global average is around 8 per cent, with logistics costs amounting to 8-10 per cent of the GDP in the US and Europe, and 9 per cent in China respectively.
To unlock the full potential of our retail sector, it is imperative to bring down logistics costs. This reduction can lead to more competitive pricing, better profit margins for retailers, and ultimately, more affordable products for consumers. Achieving this target requires a multi-faceted approach, adopting global best practices, and implementing strategic infrastructural developments.
Government initiatives paving the way
Backed by recent announcements by the government that it will increase the outlay for infrastructure and initiatives on trade facilitation and reduction, affordable tech, and changing consumer behaviours, the logistics industry is predicted to grow 8.8 per cent annually to $484.43 billion by 2029. India has moved up six places in the World Bank’s Logistics Performance Index to 38th in 2023, out of 139 countries. A significant catalyst for transforming the logistics landscape is the government’s National Logistics Policy (NLP), which works towards a comprehensive framework to improve the logistics performance index, reduce cost and create data-driven decision support mechanisms for an efficient logistics ecosystem by promoting standardisation, encouraging investments and fostering innovation.
The NLP also focuses on the digitisation of processes. Digital platforms for real-time tracking, e-documentation, and seamless information exchange can eliminate inefficiencies and reduce delays. Moreover, the policy envisages the development of a Unified Logistics Interface Platform (ULIP) to bring all stakeholders onto a single platform, facilitating better coordination and collaboration.
The emphasis on sustainability is another crucial aspect. By promoting eco-friendly practices such as the use of electric vehicles, energy-efficient warehousing, and sustainable packaging, we can also minimise our environmental footprint.
Global lessons towards driving efficiencies
Countries like Germany offer valuable lessons — its logistics sector is renowned for its efficiency and reliability, supported by advanced infrastructure, technology integration, and a skilled workforce. The German model emphasises the seamless integration of various transportation modes, robust warehousing facilities and efficient inventory management systems. For instance, the use of digital technologies such as Internet of Things (IoT), Artificial Intelligence (AI), and data analytics has significantly enhanced the predictability and reliability of logistics operations.
We can take a leaf out of Germany by investing in technology and infrastructure. We began this journey with the Gati Shakti National Master Plan, which focuses on providing formal education and skilling. Additionally, improving warehousing standards and practices is essential as a modern, tech-enabled warehouse can streamline inventory management, reduce storage costs, and minimise wastage. Implementing warehouse automation technologies such as robotics, AI, and IoT can optimise operations and enhance efficiency. This is particularly crucial for the e-commerce sector, where efficient warehousing can lead to faster delivery times and improved customer satisfaction. At Amazon, our focus is on a safe and efficient workplace.
The logistics sector also requires a skilled workforce capable of managing sophisticated systems and technologies. As envisaged in the Gati Shakti National Master Plan, investing in training and development programs for logistics professionals can create a pool of skilled labour that can drive the sector forward. Partnerships with educational institutions and industry bodies can facilitate this skill development.
A robust logistics ecosystem is not merely an economic imperative but a vital step towards achieving holistic development that can enhance the competitiveness of Indian businesses, create job opportunities and improve the standard of living for millions. That will also enable us to leverage our strategic location, connecting East and West, and become a hub for international trade.
By adopting global best practices, investing in infrastructure and skilled labour, and leveraging technological innovations, India can fully unlock its retail sector’s potential. This will propel the country towards a Viksit Bharat 2047, where the logistics industry is a catalyst for sustainable growth and economic prosperity.
The writer is Vice President (Operations), Amazon India
