There was a time when getting a parcel delivered used to take days. But with the rise of quick commerce, groceries and daily essentials now reach customers in just 10 to 15 minutes. The festive season in India has already begun, and online shopping platforms are drawing buyers with exciting offers.
Digitalisation, internet access, and mobile penetration are pushing this growth further. However, challenges still remain that are slowing the progress of India’s logistics services.
In today’s spotlight, we will explore India’s express logistics industry and the investment opportunities within it.
Current State of India’s Express Logistics Industry
India’s express logistics industry is valued at about USD 9 billion in FY25 and has grown steadily at 12 to 15% every year since FY17. It plays an important role in the economy by contributing nearly USD 1 to 1.5 billion in GST collections and around USD 650 million in customs duties in FY24, while generating employment for nearly 2.8 to 3 million people across both urban and rural areas.
The domestic express market makes up about 70% of the industry, valued at USD 6.3 to 6.5 billion, with surface express being the main driver. The international express market accounts for the remaining 30% and is expanding quickly due to the growth of cross-border e-commerce, MSME digitisation, and manufacturing exports.
The rise of quick commerce, hyperlocal delivery, and direct-to-consumer (D2C) brands has accelerated demand for faster deliveries, resulting in the previously dominant B2B segment being overtaken by the B2C and C2C segments, which now represent 55% of the market.
Growth Drivers
Growing household income and disposable income: After the income tax exemption limit was raised to Rs 12 lakh, more households have higher spending power, boosting demand for logistics services.
Internet and mobile penetration: Affordable internet and a surge in mobile phone users have fuelled e-commerce and digital transactions, creating higher shipment volumes.
Rise of quick commerce: 10-minute delivery services, along with grocery and food delivery apps, have increased the need for faster and more reliable logistics.
Changing lifestyle trends: From dining in restaurants to ordering food at home, and from visiting grocery stores to using instant delivery apps like Zepto and Instamart, urban consumers now prefer convenience due to hectic work schedules.
Expanding Tier 2 and Tier 3 cities: Logistics companies are entering new markets beyond metros, tapping into growing demand from smaller towns.
Booming e-commerce and D2C brands: Online retail and direct-to-consumer businesses are growing rapidly, creating sustained demand for express delivery networks.
Adoption of technology and automation: The use of AI, IoT, drones, and automated warehouses is making logistics faster, more efficient, and cost-effective.
Challenges
High logistics cost: Global logistics costs average 7 to 8% of GDP, but in India, they remain close to 13 to 14%. Over-reliance on road transport, fuel expenses, and fragmented supply chains are the main reasons.
Last-mile delivery challenges: In India, last-mile delivery is costly and faces issues in Tier II and Tier III cities, along with heavy dependence on cash-on-delivery. In contrast, developed nations benefit from structured postal codes and reliable courier systems.
Skill gaps in workforce: India faces shortages of skilled shop-floor workers, warehouse managers, and supply chain experts. This lack of a trained workforce reduces service reliability and slows down operations compared to developed nations.
Return to Origin (RTO) surge: In India’s fast-growing e-commerce sector, a large number of shipments are returned to sellers when they fail to reach customers. This creates higher costs, disrupts supply chains, and complicates logistics operations.
Fraudulent shipping practices and courier-related frauds: Scammers use fake websites resembling genuine ones, false shipping data, or fake delivery reports, especially in cash-on-delivery orders. Such frauds lead to higher RTOs, increased expenses, disputes, and declining trust in the ecosystem.
Sustainability pressure: While many countries have adopted electric vehicles (EVs) and carbon-neutral logistics, India is still in the early stages. High costs and weak infrastructure make it difficult for companies to scale green logistics practices.
Technology and automation gaps: Developed countries use AI, robotics, drones, and smart warehouses widely. In India, only a few large companies invest in automation, while most players lag behind. Many small and mid-sized firms still rely on manual processes.
Complex regulations: Multiple rules across states, customs delays, and compliance hurdles often create shipment hold-ups. This adds cost and reduces efficiency for logistics companies.
Government Initiatives to Boost India’s Express Logistics Industry
Multi-Modal Logistics Parks (MMLPs): The government is setting up MMLPs under the Logistics Efficiency Enhancement Programme. These parks will integrate different modes of transport, reduce freight costs, and improve warehousing efficiency. They also focus on better tracking and traceability of consignments.
National Logistics Policy (NLP 2022): Launched in September 2022, this policy aims to reduce India’s logistics cost from 13-14% to the global average of 8% by 2030. It also targets improving India’s rank in the World Bank Logistics Performance Index and making business operations smoother.
Bharatmala Project: This project develops economic corridors, feeder routes, and logistics parks to strengthen road connectivity. By linking 44 corridors with logistics hubs, it follows a hub-and-spoke model to ensure faster and more efficient cargo movement across the country.
Dedicated Freight Corridors (DFCs): The government is building freight-only railway lines to speed up goods movement. The Eastern Corridor is fully operational, and most of the Western Corridor is already functional, which will reduce transit times and enhance freight efficiency.
GST, E-way Bill, and FASTag: These reforms have made road logistics faster and more transparent. They simplify tax compliance, reduce delays at checkpoints, and help parcels reach customers on time.
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Future Prospects
India’s express logistics industry is set for strong growth and is projected to reach USD 18 to 22 billion by FY30, generating nearly 7 million jobs. Shipment volumes are expected to rise to 29 billion by FY30, driven by e-commerce, hyperlocal deliveries, and fast-commerce models.
The e-commerce segment alone contributed over half of the country’s express parcel volumes in FY24 and is likely to double by FY25.
Furthermore, policy changes such as mandatory air-conditioned cabins for trucks may raise costs in the short term but will improve driver comfort, productivity, and connectivity in the long run. With these shifts, India’s express logistics industry is positioned to become a global leader and a key driver of growth in the coming decade.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
