The development of state-of-the-art multimodal logistics parks, integrating diverse transport modes, requires significant investment and meticulous planning, writes Vimal Nadar.
India’s logistics sector has undergone a transformative shift over the past few decades, emerging as a key driver of economic growth. Improvements in trade and commerce, along with regulatory initiatives such as PM Gati Shakti, the National Logistics Policy (NLP), and the Goods and Services Tax (GST), have played a significant role in shaping the sector’s evolution. These policies have streamlined processes, simplified taxation, and fostered greater collaboration between the public and private sectors.
While the PM Gati Shakti National Master Plan is envisaged as an overarching policy initiative for the logistics sector, it draws strength from a series of interconnected frameworks and policy interventions. Initiatives such as the National Infrastructure Pipeline (NIP), the National Industrial Corridor, Dedicated Freight Corridors, Make in India, the National Manufacturing Mission, NLP, and the Logistics Efficiency Enhancement Programme (LEEP) collectively expedite infrastructure creation and facilitate accelerated growth. Both the NLP and PM Gati Shakti converge meaningfully in their support for developing multimodal logistics parks (MMLPs).
However, implementation remains uneven, and the transformative potential of these frameworks is only beginning to unfold.
Key to Efficient Logistics
MMLPs are a core component of the NLP and PM Gati Shakti National Master Plan. These are typically large-scale nodal hubs that integrate road, rail, air, and maritime transport, along with logistics and warehousing services, within a single location.
By streamlining the movement of goods, MMLPs offer businesses a range of advantages, including reduced logistics costs, faster delivery timelines, and improved supply chain flexibility. These parks are being established at critical nodes across India, directly linked with highways, rail freight corridors, and ports. They serve as pivotal enablers for optimising logistics operations and enhancing India’s manufacturing and export competitiveness. The country’s freight and logistics market is projected to grow at a CAGR of over 9 per cent, reaching more than $500 billion by 2030, according to industry estimates. Strengthening logistics efficiency through MMLPs is also expected to drive industrial and warehousing demand.
In FY2023, India’s overall logistics cost as a share of GDP stood at approximately 14-18 per cent, as per the Economic Survey, compared with the global benchmark of 8 per cent. Improving logistics efficiency through MMLPs is central to India’s ambition of becoming the world’s third-largest economy by the end of this decade.
As of April 2025, of the 35 sanctioned MMLPs, those at Jogighopa, Chennai, Bengaluru, Nagpur, and Indore are in advanced stages of construction and are expected to become fully operational within the next two years. These five parks, with an estimated cumulative project cost exceeding `56 billion, can collectively handle around 74 million metric tonnes (MMT) of cargo annually, according to the Ministry of Road Transport & Highways. Additionally, bids have already been invited for MMLPs in Anantapur, Pune, and Nashik, while feasibility studies and preliminary planning are underway at other key nodal locations such as Patna, Hyderabad, Jammu, Varanasi, and Coimbatore.
Beyond logistical efficiency, MMLPs are set to amplify demand for warehouses, industrial sheds, and manufacturing units across multiple regions. With average leasing volumes of approximately 25 million sq ft annually in India’s top five cities during 2022–24, demand has remained robust.
As domestic economic growth and MMLP-driven expansion continue to accelerate, industrial and warehouse leasing is expected to grow by 5-10 per cent annually over the coming years. On the supply side, developers are likely to respond to heightened demand by upgrading offerings and introducing state-of-the-art facilities. As a result, Grade A stock is projected to double over the next five to six years, reaching 400-450 million sq ft across India’s top five cities. Demand from third-party logistics players will be particularly prominent in smaller cities, driving warehouse modernisation and improving storage efficiency across the network.
For Efficient Logistics
MMLPs are expected to enhance the efficacy of the National Logistics Policy (NLP), which outlines a strategic roadmap to reduce costs and improve the global competitiveness of Indian businesses. The policy aims to elevate India’s ranking in the World Bank’s Logistics Performance Index, targeting a position among the top 25 countries, up from 38th in 2023.
Digitally, MMLPs are complemented by the Unified Logistics Interface Platform (ULIP), a single-window system offering real-time information to stakeholders through data integration across ministries and engagement with private players.
The NLP has also laid down guiding principles to fast-track the development and operation of MMLPs through the public-private partnership (PPP) mode. Measures such as digitalisation, process reform, supply chain reliability, sustainability, and workforce development form key pillars in accelerating their rollout. Collectively, MMLPs inject vitality into the NLP’s mandate to improve logistics efficiency and connect major industrial clusters with consumption centres.
Implementation Remains Slow
Despite its potential, India’s logistics sector faces structural hurdles. These include high operating costs due to fragmented multimodal infrastructure, limited availability of quality warehousing, and uneven modal distribution. Private investment in MMLPs has been tepid, partly due to the significant capital required to develop integrated transport infrastructure and the lack of operational clarity in PPP frameworks. Additional challenges include regulatory bottlenecks, land acquisition delays, and the need for seamless intermodal connectivity.
According to the Asian Development Bank, over 60 per cent of freight in India still moves by road—a share considerably higher than in many developed economies. Coastal shipping and inland waterways remain underutilised, while rail and air freight suffer from unfavourable pricing structures and inadequate terminal integration. For MMLPs to be viable in the long term, access to consistent captive cargo volumes is essential.
Their importance in nation-building, however, is undeniable. MMLPs have the potential to lower logistics costs, optimise supply chains, reduce transit losses, and accelerate the shift towards more sustainable freight systems.
Need for a Multi-Pronged Approach
Given the inherent challenges in developing MMLPs, a multi-pronged strategy is essential. Stable investment and financing mechanisms, a conducive policy ecosystem, and clear governance frameworks must underpin India’s push towards an MMLP-driven logistics network.
Private equity and financial instruments such as Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) offer promising routes to unlock capital and overcome financing constraints. To further encourage private participation, concessions on registration charges and utility expenses should be considered, alongside tax incentives such as GST relaxations and input credits on capital investments.
Zoning and floor space index (FSI) norms may need to be restructured to enable vertical expansion and multi-level storage solutions. Deployment of automation, robotics, and artificial intelligence can enhance inventory planning, streamline supply chains, and substantially reduce operating costs. Co-locating value-added services—including customs clearance, freight aggregation, sorting, weighing, and packaging—within MMLPs will help minimise secondary logistics costs and strengthen their commercial appeal.
Introducing deemed approval mechanisms for MMLP development would accelerate construction timelines, while tying sustainability-linked incentives to these projects would align them with national carbon goals and international best practices. Ultimately, MMLPs are positioned to modernise India’s logistics architecture and power future economic growth. Realising this vision requires concerted collaboration across government, investors, and private stakeholders.
About the author:
Vimal Nadar, National Director of Research, Colliers India.Roadblocks to Realisation: Challenges Facing Projects
High Capital Intensity and Tepid Private Investment
Developing an integrated transport and warehousing infrastructure demands substantial upfront investment. Private sector participation remains limited due to long gestation periods and uncertain returns.
Fragmented and Underdeveloped Modal Infrastructure
India’s freight movement remains heavily road-dependent (over 60%), with coastal shipping, rail, and inland waterways underutilised due to poor integration and pricing inefficiencies.
Regulatory Bottlenecks and Land Acquisition Delays
Complex approval processes, inconsistent state-level regulations, and delays in acquiring contiguous land parcels hinder project execution.
Lack of Operational Clarity in PPP Frameworks
Ambiguities in public-private partnership models, including risk-sharing mechanisms and revenue models, deter investor confidence and slow implementation.
Inadequate Intermodal Connectivity and Terminal Integration
Seamless cargo transfer between modes is often hampered by the absence of unified planning, resulting in inefficiencies and higher logistics costs.
Unlocking Potential: Five Strategic Solutions to Accelerate Development
Strengthen Financing through InvITs, REITs, and Incentives
Leverage Infrastructure and Real Estate Investment Trusts to unlock long-term capital. Offer tax incentives, GST input credits, and concessions on registration and utilities to attract private players.
Streamline Approvals with Deemed Clearance Mechanisms
Introduce fast-track, deemed approval systems to reduce bureaucratic delays and accelerate construction timelines, especially in high-priority logistics corridors.
Enhance Modal Integration and Terminal Connectivity
Prioritise seamless intermodal linkages by co-locating road, rail, air, and port infrastructure. Invest in terminal upgrades and unified planning to reduce cargo handling time and costs.
Modernise Infrastructure with Automation and AI
Deploy robotics, AI, and digital inventory systems to optimise warehouse operations, improve supply chain visibility, and reduce operational inefficiencies.
Reform Zoning and Enable Vertical Expansion
Update FSI norms and zoning regulations to support multi-level storage and integrated value-added services (e.g., customs, packaging, sorting) within MMLPs, enhancing their commercial viability.