With India's gross domestic product growing at over 7% now estimated at US$ 1.

22 trillion per
year and the manufacturing sector enjoying double digit growth rates, Indian freight industry is
expected to grow at a rate of 10%.
India spends 15 to 20% of its GDP on transport and logistics compared to an average 8 to 10%
in other developing countries. The freight transportation industry trends also indicate that
freight operations which are port based predicted to grow at 20% to 25%, with the proposed
capacity additions at major and minor ports. This report provides industry professionals and
strategists- sector analysts, investors, trade associations and regulatory bodies with independent
forecasts and competitive intelligence on the Indian freight transport industry. India also has
some growth enablers today, in the form of over US$ 500 billion worth of infrastructure
investments, planned in governments 11th five year plan from 2007 till 2012.
According to NOVONOUS estimates Rail freight will experience steady but less spectacular
growth, given the predominance of the state-controlled Indian Railways and will grow at a rate
of 10%. All other transport modes should experience faster growth, with international air cargo
turnover performing strongly as more private airlines join the market. Sea transport through
Indias major ports will also perform well and grow at 9.2% with the entry of private players in
the sea freight sector. India to emerge as a major destination for container operations, efforts for
modernization of sea ports are proving to be a boon. Air freight is also growing at a rate of 8.5%.
The major factor over the next few years driving change will be the rising competitive pressures
from cargo operators among Indias immediate neighbours and main trading partners.

The Indian economy is the ninth largest economy of the world and also one of the fastest growing world economies.
This growth is attributed to various Indian industries which have grown tremendously post independence to increase
national income, to generate employment and to generate foreign earnings. India was initially an agriculture based
economy but after liberalization norms of 1991 particularly, the services sector has taken a lead contributing the
most to the gross domestic product. Presently the agricultural, manufacturing and service sector account for 16, 27,

57 percent of GDP respectively. The most important industries from the point of view of Indian economy are listed
below:

Textile industry is a booming industry of India with India being one of the largest textile producers of the world. It
makes a large contribution to the Indian economy in view of large proportions of its direct and indirect employees
and its forex generation capacity. The textile sector accounts for 14 per cent of the total industrial production,
contributes about 4 per cent to the national gross domestic product (GDP), and earns India 17 percent of its total
exports. Around 35 million people are directly employed in textile industry. This means that after agriculture, the
textile industry textiles employs second largest number of employees. Therefore, the development in this industry
will definitely make the economy of the nation healthier.
Indias transport sector is large and diverse; it caters to the needs of 1.1 billion people. In 2007, the sector
contributed about 5.5 percent to the nations GDP, with road transportation contributing the lions share.
Good physical connectivity in the urban and rural areas is essential for economic growth. Since the early
1990s, India's growing economy has witnessed a rise in demand for transport infrastructure and services.
However, the sector has not been able to keep pace with rising demand and is proving to be a drag on

the economy. Major improvements in the sector are required to support the country's continued economic
growth and to reduce poverty.
Railways. Indian Railways is one of the largest railways under single management. It carries some 17
million passengers and 2 million tonnes of freight a day in year 2007 and is one of the worlds largest
employers. The railways play a leading role in carrying passengers and cargo across India's vast territory.
However, most of its major corridors have capacity constraint requiring capacity enhancement plans.

India phenomenal growth across industries doubled with the entry of multi-nationals have
spawned the need for smart logistics and efficient supply chain management. In this rapidly
growing market quality service is of utmost importance for logistics service providers face the
stiff competition and retain customers. So what can logistics service providers do to overcome
their challenges? Technology is the key. Traditionally in the logisticss sector, which is primarily
unorganized, information technology has faced extreme neglect. It has only of late logistics
companies realized the importance of Information technology in transforming them into a more
efficient and competitive. The logistics sectors failure in adopting technology has been one of the
biggest

stumbling

blocks

in

its

progress.

The low penetration of technology in the logistic sector coupled with the highly redundant
processes, wastes lot of time and is an obstacle to expansion of operations beyond certain limits.
The rudimentary systems used by the logistics companies are outdated and incapable of serving
the needs of current times. Among those who have adopted technology to some extent, the use of
independent software for each of their processes has created islands of information. These
independent systems or do not communicate with each other, affecting the visibility and decision

taking ability of the company, thereby undermining their efforts and ability to provide efficient
logistic services.

Indias ranking slipped to 46th in the 2012 World Banks Logistics Performance Index, which
measures logistics efficiency and is now recognised globally.
Five years ago, India was ranked 39. The drop in ranking is a matter of concern for the country,
which is expecting a lot of foreign investment across sectors that require an efficient logistics
system.
A countrys ability to trade globally depends on its traders access to global freight and logistics
networks. And the efficiency of a countrys supply chain (in cost, time and reliability) depends
on specific features of its domestic economy (logistics performance).
Better overall logistics performance and trade facilitation are strongly associated with trade
expansion, export diversification, attractiveness to foreign direct investment and economic
growth, says the World Bank. Based on a global survey of freight forwarders and express
carriers, the Index is a benchmarking tool developed by the World Bank that measures
performance along the logistics supply chain within a country.

Allowing for comparisons across 155 countries, the Index helps countries identify challenges and
opportunities and improve their performance. The World Bank conducts the survey every two
years.

weaknesses
Expressing concern on the low ranking, the Union Shipping Minister, Mr G.K. Vasan, recently
in Chennai, said that it reflects some weaknesses in our logistics system. Logistics cost in India
is high at 13-14 per cent of GDP compared with 7-8 per cent in developed countries.
India is emerging as one of the worlds leading consumer markets. It expects to sustain strong
growth over the coming years and strives to become one of the top three economies in the world
by the middle of the century. The logistics sector plays a major role in supporting this cause and
the connectivity and convenience in operations is key for sustaining global trade growth.