Indian logistics must clean up its act before time runs out

India’s economic expansion, underlined by a formidable rate of growth, is fuelling a surge in demand for logistical services, with an estimated sectoral value of over $228 billion in 2024. This is growing at double-digit rates and is expected to reach $380-490 billion by 2030. E-commerce logistics alone is forecast to reach $7.85 billion by 2030. Niti Aayog says the sector contributes about 14% to India’s GDP, much higher than the 8-9% in developed economies, due to inefficiencies in warehousing and transport. 

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Logistics is expected to grow exponentially, but will come with a substantial carbon footprint. India is already the world’s third-largest emitter of planet-warming gases, with the logistics sector contributing about 13.5% of India’s greenhouse gas emissions. If current trends persist, road freight emissions alone could quadruple by 2050. 

Logistics, therefore, is both acutely vulnerable to climate shocks and central to India’s decarbonization roadmap. This necessary transformation is no longer abstract. This year, extreme heat has warped highways, urban flooding has disrupted life and landslides have cut off supply routes in the Northeast. These events aren’t anomalies. They are India’s new logistical baseline.

There is an opportunity embedded in this disruption. A shift to low-emission freight, predictive analytics, resilient infrastructure and greener warehousing could convert climate vulnerability into a competitive advantage. For instance, shifting just a quarter of freight traffic to rail and coastal shipping can slash emissions while lowering costs. Electrifying last-mile delivery fleets could cut urban transport emissions by up to 20% by 2030.

A critical structural vulnerability within India’s logistics network is its over-reliance on road transport, which handles 70% of freight movement and accounts for a staggering 88% of logistics-related emissions. With goods transported on highways expected to grow fourfold by 2050, a business-as-usual approach dependent on fossil fuels threatens to significantly amplify emissions, undermining India’s global commitment to go carbon-neutral by 2070. Continuing with conventional trucks to meet the rise in freight traffic could result in over $1 trillion of crude oil imports by 2050, according to Niti Aayog. 

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Another instance is the inefficiency of the cold chain sector in a country where nearly 40% of farm produce goes waste. It remains underdeveloped and fragmented, with only about 60% of its capacity effectively utilized, indicating untapped potential for climate resilience and economic gain. Investing in modern, efficient cold chains is now a strategic imperative to address food waste (a significant source of greenhouse gas emissions) and boost climate resilience.

Similarly, climate-smart logistics would also require widespread adoption of data-driven risk mapping and decentralized inventory systems. The sector needs to implement a multimodal shift, reducing road freight to more rail, coastal and inland waterways shipping. The Maritime India Vision aims for a 30% reduction in carbon emissions per tonne of cargo by 2030.

The logistics business in India needs adaptive strategies that coalesce into a three-pillar framework: decarbonization at scale, supply chain diversification and resilience, and tech-driven efficiency. The transition involves a fleet and infrastructure transformation. Electric vehicles (EVs) for last-mile delivery can reduce logistical emissions by 15-20% by 2030. Although heavy-duty EVs are still nascent, alternatives like LNG and hydrogen powered vehicles are emerging for long-haul transport. Green warehousing demand will surge by 200% in a few years, driven by regulatory requirements and operational advantages.

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Indian companies have broadly responded to climate volatility by spreading risk across suppliers. About 96.5% of corporate purchases now involve firms with diversified supplier networks across districts, says EY. Predictive analytics has become essential infrastructure. Real-time data systems enable firms to anticipate disruptions, optimize routing and manage inventory dynamically. 

A digital transformation could show how sustainability and efficiency are complementary rather than competing objectives. Transport Corporation of India’s shift of chemical shipments to rail-transported jumbo bags exemplifies this convergence. The change reduced emissions, minimized packaging waste, decreased transit damage and improved delivery efficiency.

Despite clear benefits, implementation faces barriers. EY surveys indicate that a third of firms lack compelling business cases for sustainable supply chains. Bridging this gap requires financial remodelling that captures long-term risk-adjusted returns and targeted policy incentives. 

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The clock is ticking. Without policy coherence, industry standards and climate-aligned capital, the logistics sector risks becoming the Achilles’ heel of India’s growth story. The choice is stark: adapt and thrive or maintain the status quo and face economic adversity.

The author is an independent expert based in New Delhi, Kolkata and Odisha. Twitter: @scurve Instagram: @soumya.scurve.