As India’s freight volumes continue to expand, the associated CO2 emissions are rising just as rapidly. To establish itself as a global leader in sustainable logistics, the country must pursue bolder, deeper, and more deliberate systemic reforms, argues Vivek Lohia.
India is moving fast, whether by roads, rails, and across seas. With its freight economy driving economic expansion, the country is transforming how goods move across its vast geography. The logistics market, projected to grow from $317.26 billion in 2024 to $484.43 billion by 2029 at a CAGR of 8.8 per cent, according to global management consultancy IMARC, is undergoing a major overhaul. Digital upgrades, infrastructure expansion, and multimodal integration are reshaping the sector. Behind this push is a clear ambition: to position India as a globally competitive manufacturing and trade hub.
Yet, with this momentum comes a pressing challenge: rising CO2 emissions. As freight volumes surge, so do emissions, posing a direct conflict between economic ambition and climate responsibility.
India ranks 44th in the World Bank’s Logistics Performance Index (2023), behind countries like Vietnam and Malaysia. With over 60 per cent of freight emissions coming from trucks, there is a critical need for greener transport solutions to stay globally competitive. The country has already made some important strides in this regard. However, to truly lead in sustainable logistics, the next phase must be bolder, deeper, and more deliberate.
The freight landscape
Globally, countries like Germany, Japan, and the Netherlands have optimised freight logistics through railways and inland shipping. In contrast, India’s heavy reliance on roads aligns with trends seen in rapidly urbanising economies. The country moves over 4.6 billion tonnes of freight annually—about 70 per cent by road, 26 per cent by rail, and the remaining 4 per cent via inland waterways, pipelines, and air. While roads offer extensive reach and flexibility, they are also the most emission-intensive. Rail transport, despite emitting up to 75 per cent less CO2 per tonne-kilometre compared to trucks, remains significantly underutilised.
India’s road-heavy logistics model comes at a cost. Logistics expenditure accounts for 13-14 per cent of GDP—well above the global average of 8-10 per cent. The reasons are clear: congested highways, idle fleets, and last-mile unpredictability. These bottlenecks hinder competitiveness, particularly in exports and e-commerce fulfilment. Recognising this, the government has introduced a suite of initiatives, including the National Logistics Policy for systemic reform, the PM Gati Shakti masterplan, Bharatmala for road connectivity, and Dedicated Freight Corridors (DFCs) to enhance rail freight. The ambition is clear: reduce logistics costs to single digits, increase rail’s freight share to 45 per cent by 2050, and decarbonise logistics in parallel.
Revamping rail and road
The Indian Railways, traditionally a passenger-centric system, is being reoriented to carry more freight, faster, cleaner, and more efficiently. The Eastern and Western Dedicated Freight Corridors (DFCs) are nearing completion, enabling freight trains to run at speeds of 70 km/h, three times the current average. These corridors will significantly ease congestion on passenger rail lines, reducing delays and cutting fuel use. In Gujarat and Maharashtra, Indian Railways is piloting short-haul freight services under 300 km, offering competitive rates to shift cargo from roads to rail. By lowering tariffs and streamlining booking and handling, the goal is to make rail viable even for intra-state logistics.
In parallel, multitracking projects—including key routes like Delhi-Mumbai and Chennai-Bengaluru—are being fast-tracked, while over 99 per cent of the broad-gauge network is now electrified, drastically reducing diesel reliance and improving energy efficiency. Hydrogen-powered locomotives may no longer be a distant dream, while self-propelled passenger trains like the Vande Bharat have been successfully rolled out. Freight Smart Cities are being envisioned to integrate warehousing, terminals, and rail-road connectivity, improving end-to-end cargo flows.
Trucks remain indispensable to India’s freight future. Over 7 million heavy-duty trucks currently ply the country’s roads, with that number expected to double by 2030. Decarbonising this sector is crucial. Commercial EV adoption is gaining momentum, with improved vehicle range, falling battery costs, and government-backed subsidies such as Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) and state EV policies, making electric trucks increasingly viable for last-mile and intra-city deliveries. Companies plan to invest in and deploy thousands of liquefied natural gas (LNG)
and electric trucks by 2026, serving clients across e-commerce, manufacturing, and mining. Biofuels, ethanol-blended petrol, and hydrogen are being explored, particularly for long-haul fleets. Under the e-FAST India programme, the country’s first zero-emission road freight cluster is being developed along the west coast, supported by government-industry partnerships.
Logistics infrastructure is evolving,too: 35 multimodal logistics parks (MMLPs)are under development to co-locate road, rail, and warehousing operations, streamlining cargo movement.
While these initiatives are commendable, much work remains. Freight emissions continue to rise sharply, with heavy-duty vehicles—just 2-3 per cent of India’s fleet—accounting for over 30 per cent of transport-related CO2 emissions. According to the think tank, Council on Energy, Environment and Water (CEEW), India’s freight demand is set to soar from 2,000 billion tonne-km in 2020 to over 10,000 billion tonne-km by 2050. Without decisive intervention, freight emissions alone could derail India’s climate goals.
So, how can India sustain its freight expansion while meeting net-zero targets?
Pulling the five strategic levers
Currently, rail freight is most competitive over distances exceeding 500 km. However, most domestic cargo moves within shorter ranges, making the expansion of short-haul rail services an urgent priority for India. Achieving this will require dynamic pricing models to compete with trucking rates, containerised movement for greater flexibility, investments in smaller terminals and sidings to speed up loading and unloading, and app-based freight booking systems to onboard micro, small, and medium enterprises (MSMEs) along with local players. By making rail transport nimble and cost-effective on 200-400 km routes, India can unlock a significant modal shift.
Designate clusters near DFCs, ports, and industrial parks as green freight economic zones (GFEZ), with dedicated infrastructure and policy support. Each GFEZ could mandate that 50 per cent of freight movement be done via rail, EVs, or LNG trucks, incentivise EV adoption through electricity subsidies and priority loading, and power warehouses with renewables, turning them into net-zero logistics hubs. Such zones can serve as incubators for clean technologies while delivering scale.
Here, the framework for taxing freight transport also needs an overhaul. Conduct a dedicated awareness campaign in close collaboration with the auto manufacturers on implementing technologies to reduce emissions. Offer reduced GST slabs or tax holidays for operators switching to electric or alternative fuel fleets. Provide green credits to logistics companies that meet carbon efficiency benchmarks. Beyond tax incentives, regulatory transparency can further accelerate freight decarbonisation. Establishing a national, publicly accessible green freight registry would track emissions intensity across fleets, routes, and modes, providing critical data for ESG-aligned supply chain decisions. Such a registry could also enable government procurement to favour green logistics providers and offer data-driven eligibility for green loans and carbon markets. Ultimately, transparency is the first step toward accountability.
Finally, the future of Indian freight isn’t about road vs. rail, but it is about orchestrating both, along with inland waterways and coastal shipping. Therefore, the country must expand inland waterway cargo movement, especially along the rivers Ganga and Brahmaputra, improve port-hinterland rail connectivity, cut down on road congestion, and integrate Unified Logistics Interface Platform (ULIP) with private transport management systems to create an end-to-end freight visibility network
The goal should be clear: the most efficient route, regardless of mode.
Impossible is nothing!
India is making all the right moves, but now is the time to stitch them together into a cohesive, scalable green freight strategy. The pieces are there: dedicated corridors, zero-emission trucks, logistics parks, and progressive policies. What is needed is urgency and unity of action. A cleaner freight economy is not a luxury. It is a necessity. It will bring down logistics costs, open up global trade lanes, and improve air quality for millions. It will also solidify India’s position as a leader not just in growth, but in green growth.
The foundation is set, the momentum is building, but will India seize the moment to redefine green freight for the world?
If India can move 10 billion tonnes of goods without wrecking its air, burning more fuel, or clogging its highways, it would do more than decarbonise logistics. It would define how a developing economy leaps into the future, cleanly, competitively, and confidently. Imagine a 2040 where India’s freight runs on clean energy, costs 30 per cent less, and powers not just the economy but global leadership in green growth. This is not a utopian vision; it is entirely achievable with sustained policy action and private sector resolve.
About the author:
Vivek Lohia, Managing Director, Jupiter Group. He also serves as Chairman of the National Railway Council of ASSOCHAM and is a member of several industry chamber committees, including those of FICCI and CII.
Green Freight: Rising Emissions, Bold Targets
Logistics Market Boom
India’s logistics sector is projected to grow from $317.26 bn in 2024 to $484.43 bn by 2029, expanding at a CAGR of 8.8%, positioning the country as a global logistics powerhouse.
Emission Challenge
Over 60% of India’s freight emissions stem from road transport, underscoring the urgent need to accelerate rail freight expansion, clean energy adoption, and multimodal solutions.
Skewed Modal Mix
Despite rail being up to 75% more efficient,
70% of India’s freight still moves by road,
making the system costly and CO2-intensive. Scaling rail and inland waterways is critical for sustainable logistics.
Railway Modernisation Push
India is transforming rail freight with DFCs and 99% broad-gauge electrification, reinforcing Indian Railways as a freight-first backbone for economic growth.
Vision 2040
By 2040, India aims to reduce logistics costs by 30% and double freight volumes, without doubling emissions through policy integration, clean tech, and infrastructure modernisation.