India Road Freight Market Outlook to 2028

India Road Freight Market Overview

• The India Road Freight Market was valued at USD 1.2 Bn in 2023. This growth is driven by the growing e-commerce sector, increased infrastructure development, and the expansion of retail and FMCG sectors. The demand for faster and more efficient logistics solutions has also fueled the market, as businesses increasingly rely on road transport to meet consumer expectations for quick delivery.
• The market is highly fragmented, with a mix of large organized players and numerous small fleet operators (SFOs). Major players in the market include Tata Motors, V Trans, TCI Freight, and DGFC. These companies dominate due to their extensive fleet size, advanced logistics solutions, and widespread geographic reach. They provide a variety of services including long-haul, express, and last-mile delivery, catering to sectors such as automotive, FMCG, e-commerce, and industrial goods.
• In 2023, Tata Motors launched its first electric commercial vehicle, marking a significant step towards sustainable road freight transport in India. This move aligns with the government's push towards reducing carbon emissions and promoting green logistics. Additionally, V Trans invested INR 100 crore in expanding its fleet and digitizing its logistics management systems, aimed at enhancing efficiency and reducing operational costs.
• Maharashtra, dominates the road freight market in 2023. This dominance is due to the regions advanced industrial base, extensive road network, and the presence of major ports like Mumbai and Jawaharlal Nehru Port, which facilitate the movement of goods to and from international markets. The states strategic location as a hub for manufacturing and trade also enhances its position in the road freight sector.

India Road Freight Market Segmentation

By Fleet Size: India road freight market is segmented by fleet size into small, medium and large fleets. In 2023, small fleet operators dominate the market share, mainly due to their flexibility and ability to operate at lower costs. These operators are vital in serving the spot market and cater to regions where large operators may not find it cost-effective to operate, thereby fulfilling a crucial role in Indias fragmented road freight market.

By End User: India road freight market is segmented by end user into automotive, FMCG, e-commerce, cement, oil & gas and others. The automotive sector dominates the end-user segment share. This dominance is due to the high demand for transporting vehicles and automotive parts across Indias manufacturing hubs, coupled with the need for a reliable supply chain to ensure timely production and delivery to various markets.

By Region: The India road freight market is segmented by region into North, South, East, and West. In 2023, the West region dominated the market with share. The dominance of the West region is driven by its strong industrial base, well-developed infrastructure, and proximity to key ports, which facilitate the movement of goods domestically and internationally.

4. Competitive Landscape

• VRL Logistics Expansion into E-Commerce Logistics: VRL Logistics expanded its services to cater specifically to the growing e-commerce sector, investing INR 800 crore in new infrastructure and technology. In 2024, the company launched 10 new logistics hubs across India, increasing its handling capacity by 2 million packages per day. This expansion is projected to increase VRLs revenue from the e-commerce segment.
• Delhiverys AI-Driven Route Optimization: Delhivery introduced an AI-based route optimization system in early 2024, which has reduced delivery times across its network. This innovation, backed by an investment of INR 500 crore, is helping the company to improve its service reliability and customer satisfaction. Delhiverys adoption of cutting-edge technology is expected to set a new standard in the logistics industry.

India Road Freight Industry Analysis

India Road Freight Market Growth Drivers

• E-Commerce Expansion in India: In 2024, India's e-commerce sector is projected to grow exponentially, driving demand for road freight services. The growth in online retail is pushing the need for faster, reliable, and scalable logistics solutions. Large e-commerce players like Amazon and Flipkart are expanding their warehouse footprints and seeking dedicated road freight services to meet the increasing customer demand for same-day and next-day delivery across urban and rural areas.
• Infrastructure Development Projects: The Indian governments continued investment in infrastructure, including the construction of expressways and highways, is a critical driver for the road freight market. The government has taken up 5 Expressways and 22 Access Controlled Highways, having a total length of 9,860 km with an approved/estimated project cost of Rs. 4,19,130 crores.
• Rising Demand for Cold Chain Logistics: The Indian cold chain logistics market is expanding rapidly, the current cold storage capacity in India is estimated to be around 39.42 million metric tons. As a result, there is a growing need for specialized refrigerated trucks, pushing road freight operators to invest in cold chain infrastructure and technology to cater to this burgeoning segment.

India Road Freight Market Challenges

Increases in Fuel Prices: Rising fuel prices significantly impact the operational costs for fleet operators in the Indian road freight market. As fuel is a major expense for transportation companies, any increase can lead to higher overall expenses, which erode profitability and reduce competitiveness. This challenge forces operators to either absorb the costs, which affects margins, or pass them on to customers, which can reduce demand.

Limited Access to Capital: Many operators in the Indian road freight market face difficulties in accessing capital, which restricts their ability to expand operations, purchase new vehicles, or maintain service quality. This lack of financial resources hinders growth and prevents companies from meeting the increasing demand for road freight services. Limited access to capital can also affect the ability to invest in technology and training, further constraining operational efficiency.

India Road Freight Market Government Initiative

National Logistics Policy Implementation: In 2024, the Indian government is rolling out the National Logistics Policy, which aims to bring down logistics costs from 14% to 8% of GDP by 2030. The policy focuses on the development of multi-modal logistics parks and the integration of digital technologies. The government is also introducing logistics hubs across key economic zones, enhancing road freight connectivity and efficiency.

Incentives for Electric Vehicles (EVs): The FAME II scheme was launched in April 2019 with an initial budget outlay of INR 10,000 crore, which was later increased to INR 11,500 crore. This funding was intended to support the adoption of electric vehicles (EVs) across various segments, including commercial vehicles. This move is expected to reduce the carbon footprint of the road freight sector and decrease operational costs for fleet operators.

India Road Freight Market Future Outlook

The India Road Freight Market is projected to reach USD 192 Billion by 2028. The market will witness increased adoption of electric vehicles (EVs) and advanced fleet management systems, driven by the need for cost efficiency and sustainability. The automotive, FMCG, and e-commerce sectors are expected to remain dominant, with significant contributions to the overall market revenue.

Future Trends

Expansion of Digitalization in Freight Management: The future of India's road freight market will increasingly rely on digitalization, with the adoption of cloud-based transportation management systems (TMS), electronic logging devices (ELDs), and mobile apps. These technologies will enable real-time tracking, optimize routes, and improve overall efficiency, making digital tools a must-follow trend for companies aiming to stay competitive and reduce operational costs in the evolving logistics landscape.

Growth of Green Logistics Initiatives: As environmental concerns become more prominent, the adoption of green logistics practices is expected to rise. The future will see a greater emphasis on eco-friendly vehicles, fuel-efficient technologies, and carbon-neutral delivery solutions. Companies in the Indian road freight market will invest in sustainable transportation options to align with global environmental standards and reduce their carbon footprint, making green logistics a key long-term target for the industry.