Tech-Enabled Transportation Services Cut Logistics Costs For MSMEs: C-DEP–IIT Delhi Study

New Delhi, Jan 20 (KNN) The Centre for Digital Economy Policy Research (C-DEP), in collaboration with IIT Delhi, released a report titled ‘Study of Technology-Enabled Intra-City Logistics for MSMEs’ at the India Habitat Centre, highlighting the critical role of tech-driven logistics in supporting Micro, Small, and Medium Enterprises (MSMEs).

The report was released by Praveen Khandelwal, Member of Parliament and Secretary General, Confederation of All India Traders (CAIT), and Ashwini Mahajan, Co-Convener, Swadeshi Jagran Manch, BusinessWire India reported.

MSMEs Face Intra-City Logistics Challenges

MSMEs contribute nearly 30 per cent of India’s GDP and 45 per cent of industrial output but often struggle with high transport costs, limited vehicle availability, and delivery delays. 

The study, based on MSME interviews and service data, shows that technology-enabled logistics reduces costs, improves delivery reliability, and enhances operational efficiency.

Leaders Stress Technology’s Role

Speaking at the release, Khandelwal noted, “The key to India becoming a developed nation depends on lowering logistics costs for our MSMEs.” He added, “A significant part of logistics costs in India can be attributed to road transport. To bring logistics costs down to 4–5 per cent of GDP, improving cost efficiency in road-based and intra-city logistics will be crucial.”

Mahajan said MSMEs are now excelling with technology—from anti-drone systems to defence innovations. She highlighted India’s strong tech ecosystem, including UPI and space capabilities, and noted that the country’s rising global standing reflects its growing leadership potential.

Dr. Jaijit Bhattacharya, President, C-DEP, highlighted that a large portion of road transport costs comes from intra-city goods movement, and technology-enabled transportation services are helping MSMEs cut these costs. Beyond savings, they boost reliability, efficiency, and labour productivity, supporting higher earnings and customer trust.

“If higher taxes make these services unaffordable, MSMEs lose a tool that improves efficiency and customer trust. Better clarity would ensure that technology adoption is not penalised,” she added.

Key Findings

Business users make up 71 per cent of tech-enabled logistics users but account for 97 per cent of orders across vehicle categories.

73 per cent of MSMEs reported lower transport costs, 95 per cent noted improved on-time delivery, and 27 per cent expanded customer reach.

Policy and Regulatory Risks

The report warns that GST 2.0 could classify digitally booked transport services as ‘Local Delivery Services’, raising tax rates from 5 per cent to 18 per cent and increasing per-trip costs by over 12 per cent, disproportionately affecting MSMEs.

Ecosystem and Transition Considerations

Challenges for small operators include formalisation, documentation, and access to digital infrastructure. State-level initiatives for fleet electrification are critical for sustainable intra-city logistics, requiring alignment with vehicle availability and charging networks.

Recommendations

The study urges clear GST guidelines, phased formalisation of transport operators through digital platforms, and targeted PLI support for transitioning to electric freight vehicles to maintain affordability and efficiency for MSMEs.

This report underscores that tech-enabled logistics is not just a cost-saving tool but a strategic enabler for MSMEs, enhancing competitiveness, operational reliability, and market access.

(KNN Bureau)