ICRA: Indian logistics industry expected to grow 8-10% over medium term

With industrial output and consumption-driven sectors recovering in H2 FY2018 from the initial lull post GST implementation, the freight demand in the country has also reported healthy pickup during the second half of the previous fiscal. ICRA maintains a stable outlook for the Indian logistics industry, expecting it to grow at 8-10 per cent over the medium term. Shamsher Dewan, Vice President & Sector Head – Corporate Ratings, ICRA, says, “From an aggregate revenue growth of only 4.6 per cent in Q2 FY2018, the sample’s growth gained pace to 10.8 per cent in Q4 FY2018, as freight volumes picked up. ICRA estimates that there have been savings as high as 18-20 per cent in the truck turnaround time post the implementation of GST, supported by elimination of inter-state check posts.”

The demand growth would continue to be buoyed by pickup in industrial activity and consumption-led sectors, while increasing preference for outsourcing logistics activities would provide further impetus to organised players. Additionally, supply-side factors like improvement in logistics infrastructure and emergence of logistics start-ups would offer further impetus to growth. “The implementation of E-way bill from April 2018 has also been received positively by the transporter community, with operational efficiencies and time savings realised on account of the same. Companies are also interacting with supply chain management companies in order to explore opportunities to redesign their warehousing network,” adds Dewan.