Arvind Devaraj, COO of NLDSL, explains how cargo aggregation, rail connectivity and digital logistics platforms can help MSMEs drive India’s next freight revolution.
By Arvind Devraj
India’s freight system has traditionally been shaped by large industrial users moving high volumes of cargo through established transport networks. The next phase of growth, however, could come from a far more distributed source: the country’s micro, small and medium enterprises. MSMEs operate across manufacturing clusters, industrial towns and regional production hubs. Individually, many move relatively small consignments. Collectively, they generate significant freight demand and contribute more than 35% of India’s manufacturing output and nearly half of its exports. Making logistics more accessible to these businesses could create a new freight market while strengthening their ability to compete nationally and globally.
The Opportunity Is Already Distributed Across India
India’s MSMEs are not concentrated in one sector or metropolitan region. They operate across engineering, textiles, food processing, chemicals, pharmaceuticals, auto components, handicrafts and several other industries. This geographic distribution creates both a challenge and an opportunity. Unlike large manufacturers that may generate enough cargo to book full trains or dedicated capacity, smaller businesses usually move fragmented loads at different times. Their freight demand exists, but it must be identified, consolidated and connected to suitable transport services.
A recent FICCI–KPMG analysis estimates that MSMEs could represent an annual freight opportunity of about 100 million metric tonnes for Indian Railways. It identifies accessibility, cargo aggregation, terminal infrastructure and wagon availability as important areas for enabling greater participation.
Aggregation Could Change Freight Economics
Smaller consignments do not always align easily with freight systems designed around large, predictable volumes. An individual MSME may not have enough cargo to justify rail movement, even when rail offers an attractive long-distance transportation cost.
Aggregation can help close this gap
Cargo originating from different companies within an industrial cluster can be aggregated at a common logistics platform and transported as a single shipment that has commercial value. Digital platforms can facilitate matching of compatible shipments, identify common destinations, and provide clear information on schedules, capabilities, and costs. The result would be that MSMEs can benefit from the economies of scale without having to become large operators themselves. It can also lead to more consistent freight demand from rail and multi-modal operators.
Digital Access Can Be as Important as Physical Access
Even if a railway terminal or logistics park is located close to an MSME cluster, it still may be complicated for businesses to use it in case of difficulties with obtaining information, booking, and other documents. Digital access makes using freight services much clearer and easier for businesses because they will be able to obtain essential information regarding modes of transport, expected delivery time, cargo requirements, required paperwork and so on.
The Unified Logistics Interface Platform (ULIP), developed by NICDC Logistics Data Services Limited (NLDSL) under the National Logistics Policy has been designed as a nationwide logistics data gateway that connects information from different government systems. Its stated capabilities include multimodal visibility, digital verification, route insights, process simplification and API-based information exchange between public and private stakeholders.
For MSMEs, such shared digital foundations can enable service providers to build simpler freight-booking tools, tracking interfaces and documentation support. The objective is not merely to place existing processes online, but to make logistics easier for businesses with limited specialist resources.
Visibility Can Protect Working Capital
Small and medium-sized enterprises (SMEs) often find themselves in more limited working capital situations than larger companies. A delay in shipment can prevent a customer from making their payment, interfere with production or force a business to maintain extra inventory. Therefore, predicting shipments becomes incredibly important.
As long as businesses have the ability to track cargo along its entire route – ports, terminals, inland facilities and transport corridors, they can plan their production and client commitments much better. By comparing results, businesses can also see which routes or locations are more reliable. Such information is extremely useful for small and medium-sized enterprises, allowing them to protect working capital as well as plan their future transportation processes.
A More Inclusive Freight Network Can Be Greener Too
Improving MSME access to rail and multimodal services can also support India’s sustainability goals.Rail offers a structural cost advantage over road for many long-distance freight movements, but smaller businesses often continue to depend on road because it provides greater flexibility and easier first- and last-mile access. According to the FICCI–KPMG Unlocking Rail Freight Growth report, the average transportation cost is Rs. 1.96 per tonne-kilometre for rail, compared with Rs. 3.78 for road. However, the report also notes that first- and last-mile connectivity, along with other non-freight costs, significantly influence the final modal choice.
Better aggregation, terminal connectivity and coordinated first- and last-mile services could make lower-emission modes practical for a broader group of businesses.
Conclusion
India’s next freight revolution may not be driven only by larger trains, terminals or industrial users. It could emerge by making the freight network easier for millions of smaller businesses to access. MSMEs already create substantial economic activity. The opportunity lies in converting their distributed cargo demand into connected, visible and efficiently aggregated freight flows.
Physical infrastructure will provide the capacity. Digital platforms can simplify access. Shared logistics facilities can create scale, while reliable visibility can give smaller businesses the confidence to use new routes and transport modes. When India’s freight system begins working as effectively for a small manufacturer as it does for a large industrial shipper, MSMEs will not merely benefit from the logistics transformation. They could become one of its most important drivers.
The Author: Arvind Devaraj is the COO at NICDC Logistics Data Services Ltd. (NLDSL).
