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Transportation Industry in India
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TRANSPORTATION SECTOR OVERVIEW
Statistics, news & updates: everything you need to know about the Transportation Industry in India
Growth Drivers
To improve connectivity across the country, 100 per cent FDI in the road and highway sector is approved. FDI cap in the aviation sector is increased from 79 per cent to 100 per cent, with up to 49 per cent available under the automatic route.
The need for a faster and more reliable method of transportation for the transfer of goods and people develops as the economy grows.
The passenger segment is growing due to increasing urbanization. By 2050, India is expected to account for 40% of worldwide rail activity.
Sub industries
Air Equipment & Components
Cargo
Marine Equipment & Components
MRO for Airlines
Railway Equipment & Components
Railways
Road
Ship and Boatbuilding
Opportunities
India and Nepal signed an MoU (Memorandum of Understanding) in October 2021 for a proposed US$ 3.15 billion railway line project connecting Kathmandu and Raxaul, India’s border town.
By 2022, the government plans to build 65,000 kilometers of national highways for a total cost of US$ 741.51 billion.
Challenges
For transportation providers, staying on top of bulk order timeframes is difficult to keep up with the supply-chain timetable.
The cost of fuel is one of the most significant issues faced by transportation companies.
Unreliable weather conditions increase the chance of unforeseen events.
Retaining workers is a serious problem as they have they are overworked.
Another significant issue is storage. It’s no news that India’s pitiful warehouse facilities are in bad shape. Pest-infested warehouses, damage from leaks, a lack of adequate storage space, and other factors cause significant harm to cargo.
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Summary/Snapshot
By 2024, Indian Railways wants to run entirely on electricity, and by 2030, it hopes to achieve a net-zero emission network.
For FY 2019-25, the Indian government has set aside US$ 13.14 billion for the National Infrastructure Pipeline. Over the next five years, the road sector is estimated to account for 18 per cent of capital spending.
The Indian Railways is Asia’s and the world’s second-largest rail network under one management.
The National Infrastructure Pipeline (NIP) has selected 58 projects worth USD 6.6 billion for infrastructure augmentation and development at major ports between now and 2025.
Indian Railways has a total Broad Gauge (BG) network of 64,689 Route kilometers (RKM), with the Konkan Railway accounting for 740 RKM. Approximately 71 per cent of these 45,881 RKM have been electrified as of 31.03.2021.
22 Maritime Ports/Agencies/Authorities signed 486 Memorandums of Understanding (MOUs) for Maritime India Summit, 2021 totaling USD 47.02 billion across various subsectors.
With a total length of 62.16 lakh kilometers, India possesses the world’s second-largest road network. In FY 2020-21, National Highways/Expressways cover 1,36,440 km, State Highways cover 1,76,818 km, and Other Roads cover 59,02,539 km.
According to DPIIT directives on public procurement, more least 95 per cent of electric locomotive components must be sourced domestically under the MAKE IN INDIA policy.
The Northeast Special Accelerated Road Development Program (SARDP-NE) aims to improve road connection between remote northeastern areas and state capitals and district offices.
Indian Railways has the largest freight transportation loading in FY21. In the same year, Indian Railways’ freight income grew to US$ 15.84 billion, up from US$ 15.36 billion in FY20.
The Sagarmala project identified 12 key ports for freight handling until 2035. The goal of this project is to encourage port-led growth and provide infrastructure for more efficient and cost-effective transportation of commodities to and from ports.
Key Investment Opportunities
Ports
- Inland waterways and inland water transportation development
- Projects to build ports and harbors
- Projects to maintain ports and harbors
Railway
- Projects involving high-speed trains
- Dedicated freight lines are on the way.
- Manned and Unmanned level crossings: technological solutions
- Innovations in technology to increase safety and reduce accidents
Roads
- Toll-Operate-Transfer Model: Through the Toll-Operate-Transfer (ToT) system, the Ministry can raise cash by monetizing road assets built with public funding. The program calls for packaged national roadways to be bid on for a 30-year concession period.
COVID Impact
How has COVID affected the industry?
Public transportation services are one of the worst-affected economic sectors by COVID-19.
The transportation sector has experienced a demand-cum-supply shock. There is an unprecedented reduction in travel and commercial activities. Consequently, the impacts have surged over transport activities more severely.
The slowdown will affect the container traffic in the automotive transportation industry and other container cargoes (imports of white goods and granite exports) for FY21 due to weak demand.
Outlook for the Transportation industry post-Covid
- Increase in labour cost: The labour cost for skilled workers is expected to rise by 20-25% while for semi-skilled and unskilled workers the cost is expected to increase by 10-15%.
- Revised SOP’s that take into account new health and sanitary norms: Standard operating procedures require social distancing, personal protective equipment and hygiene will drive up the project cost in short term.
- Companies are considering hybrid arrangements: The work-from-home approach seems likely to continue throughout 2021 after India’s experienced a dreadful second wave of the pandemic. People have turned their home spaces into temporary home offices. We can expect a surge in demand for the home renovation, maintenance, and interior designing sector.
Key Players in India
National
Mahindra Logistics
TCI Express
Container Corporation (Concor)
VRL Logistics
Blue Dart Express
International
Fed Ex
Gateway logistics
XPO Logistics
DHL
H. Robinson
Expeditors International
Map Clusters
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