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, has released a significant report titled ‘Study of Technology-Enabled Intra-City Logistics for MSMEs’. This report highlights the crucial role of technology-driven logistics in supporting Micro, Small, and Medium Enterprises (MSMEs) in India.
Introduction
MSMEs contribute nearly 30% of India’s GDP and 45% of industrial output. However, these enterprises often face substantial challenges in intra-city logistics, including high transport costs, limited vehicle availability, and delivery delays. The findings from the study are expected to provide insights into how technology can alleviate these issues.
Key Findings of the Study
The report reveals several critical findings regarding the impact of technology on logistics costs for MSMEs:
- Business users constitute 71% of tech-enabled logistics users, accounting for 97% of orders across various vehicle categories.
- 73% of MSMEs reported a reduction in transport costs.
- 95% noted improvements in on-time delivery.
- 27% of MSMEs expanded their customer reach due to enhanced logistics capabilities.
Challenges Faced by MSMEs
Despite the benefits, MSMEs continue to face significant challenges in the logistics sector:
- High transport costs remain a major hurdle, particularly in road transport.
- Limited access to digital infrastructure hampers the formalization of small operators.
- Documentation requirements can be burdensome for small businesses.
Importance of Technology in Logistics
During the report’s release, Praveen Khandelwal, Member of Parliament and Secretary General of the Confederation of All India Traders (CAIT), emphasized the importance of lowering logistics costs for MSMEs to enhance India’s economic development. He stated, “A significant part of logistics costs in India can be attributed to road transport. To bring logistics costs down to 4-5% of GDP, improving cost efficiency in road-based and intra-city logistics will be crucial.”
Ashwini Mahajan, Co-Convener of Swadeshi Jagran Manch, highlighted the advancements in technology that MSMEs are leveraging, from anti-drone systems to innovations in defense. She pointed out that India’s strong tech ecosystem, including the Unified Payments Interface (UPI) and advancements in space capabilities, positions the country as a leader in the global market.
Impact on Operational Efficiency
Dr. Jaijit Bhattacharya, President of C-DEP, noted that a large portion of road transport costs arises from intra-city goods movement. He stated that technology-enabled transportation services are helping MSMEs reduce these costs while also boosting reliability, efficiency, and labor productivity. This, in turn, supports higher earnings and builds customer trust.
Policy and Regulatory Risks
The report raises concerns about potential policy changes that could adversely affect MSMEs. For instance, the introduction of GST 2.0 could classify digitally booked transport services as ‘Local Delivery Services’, which may raise tax rates from 5% to 18%. This change could increase per-trip costs by over 12%, disproportionately impacting MSMEs.
Recommendations for Improvement
To address the challenges faced by MSMEs and enhance the benefits of technology in logistics, the study offers several recommendations:
- Establish clear GST guidelines to avoid penalizing technology adoption.
- Implement phased formalization of transport operators through digital platforms.
- Provide targeted Production Linked Incentives (PLI) to support the transition to electric freight vehicles.
Conclusion
This report underscores that tech-enabled logistics is not merely a cost-saving tool but a strategic enabler for MSMEs. By enhancing competitiveness, operational reliability, and market access, technology can significantly contribute to the growth and sustainability of MSMEs in India. The findings of this study are essential for policymakers and stakeholders aiming to support the MSME sector effectively.
Note: The information provided in this article is based on the report released by C-DEP and IIT Delhi, and reflects the current state of MSMEs in India as of January 2026.
