Despite slowing economic growth India’s logistics industry will expand rapidly over the next four years, according to the latest report from Ken Research.
The company said the sector would achieve a compound annual growth rate of more than 15 percent over 2012 to 2016 as logistics infrastructure is boosted by new freight corridors, logistics hubs and warehouses.
“The Indian logistics market will witness huge growth opportunities for current and upcoming logistics companies in terms of revenue due to increasing production, imports, and exports activities,” said the report, titled India Logistics and Warehousing Market Outlook to 2016 - Focus on Cold Storage Chains.
The forecast came after India’s GDP growth sank to a 10-year low of 5.3 percent in 2012 as the economy suffered from policy paralysis, an infrastructure shortage and high interest rates.
Although exports of goods and services grew by more than 10 percent last year, demand was weak from key premium goods markets in the U.S. and Europe that account for over a third of export sales.
Container throughput at major ports in India dipped 1.5 percent in the first three quarters of fiscal 2012-13 from a year earlier as a slump in trade hurt traffic growth. The country’s 12 major ports handled 5.76 million 20-foot-equivalent units in the nine months through December, compared with 5.85 million TEUs in the same period in 2011, the Indian Ports Association said.
Efforts are now being made to remove trade barriers, improve infrastructure and speed up new project approvals to boost trade growth rates. Last week India’s shipping ministry said it would fast-track port development to reduce capacity shortages, starting with the award of some 25 new port projects in the first quarter of 2013 with a value of $2 billion. Among the projects due to be green-lighted in the early part of this year are new container facilities at Chennai and Haldia.
Analysts at Nomura forecast India’s real GDP will grow by 6.1 percent this year and 6.5 percent in 2014. Exports are expected to rise by 8.7 and 9.9 percent in 2013 and 2014, respectively. Imports increased by 5.7 percent in 2012 and are forecast to rise by 6.2 percent this year and 8.6 percent in 2013.
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