Improving logistics access for MSMEs could unlock huge rail freight opportunity: Report
New Delhi, July 23
Improving rail accessibility for micro, small and medium enterprises could unlock significant rail freight growth by lowering logistics costs and adding a customer segment for rail services, a report said on Thursday.
The report from FICCI and KPMG in India said many MSMEs remain dependent on road transport despite rail's structural cost advantage because of fragmented consignments, limited cargo aggregation, inadequate terminal access, first‑ and last‑mile constraints, service unpredictability and difficulty accessing suitable rolling stock.
The report said rail freight offers a strong structural advantage, with average transport costs at Rs 1.96 per tonne‑km by rail against Rs 3.78 per tonne‑km by road and a national network operates on a common technical and digital platform.
MSMEs contribute over 31 per cent of India's GDP, 35 per cent of manufacturing output and nearly half of the country's exports, making them an important driver of future freight demand, the report noted.
The report recommended strengthening freight aggregation platforms, modernising common-user terminals, improving digital visibility and customer interfaces, enhancing first- and last-mile connectivity, and adopting demand-led wagon planning to improve rail accessibility for MSMEs.
"Moreover, rail operates across the country on a uniform operating system on a non-discriminatory basis and is therefore capable of offering competitive logistics services to them. By addressing accessibility concerns, rail and MSMEs can gain symbiotically and play a pivotal role in India's freight ecosystem and economy," said Sameer Bhatnagar, Partner and Lead - Mobility & Logistics, KPMG in India.
Union Minister of Road Transport and Highways, Nitin Gadkari in April said that India's logistics cost will drop to 9 per cent at the current robust pace of road infrastructure development.
The Union Minister said that research by IIT Bangalore, IIT Kanpur and IIT Chennai completed six months ago showed road‑infrastructure improvements had already reduced logistics costs by 6 per cent to about 10 per cent, a statement said.
— IANS
Reader Comments
Interesting report. The cost difference is striking—Rs 1.96/tonne-km for rail vs Rs 3.78 for road. But as someone who worked in logistics, the fragmentation issue is huge. MSMEs typically ship small lots—a few pallets at a time—and rail is designed for bulk. Aggregation platforms could work, but they need investment and trust. Gadkari's comment about logistics cost dropping to 9% is ambitious. Let's see if rail reforms can match the pace of road development. 🚚
As a small manufacturer in Pune, I can tell you why we stick to road transport. Rail is cheaper per tonne, but by the time you factor in loading/unloading charges, bribes at goods sheds, and delays of 2-3 days, the savings vanish. The report is right about digital visibility—we need a system where I can book a wagon online like booking a truck. Until then, it's just another government report gathering dust. Sorry to sound cynical, but been there, seen that. 😅
This is a fantastic initiative if implemented properly. MSMEs contribute 31% to GDP and 35% of manufacturing—if rail can reduce their logistics costs by even 30%, that's huge. The recommendation about modernising common-user terminals is spot on. But we need more than reports. Action on the ground matters. For instance, why can't we have dedicated rail sidings at industrial parks like the ones proposed for the Delhi-Mumbai Industrial Corridor? Let's walk the talk. 🌟
The cost benefit is clear—rail is half the price. But in my experience managing supply chains in India, the issue is predictability. Road
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