With Indian GDP growing at over 8.5 per cent per year and the manufacturing sector achieving double-digit growth, the Indian logistics industry is at a transition phase to reach a market size of over $125 billion in 2010 and $180 billion by the year 2012.

Logistics costs in India are 13 per cent of its GDP compared to 11 per cent in Japan, 10 per cent in Europe and 9 per cent in the US.

"With country spending 13 per cent of GDP on logistics and the manufacturing sector growing at double digits, logistics costs are expected to go up to 18-19 per cent of GDP", said Tushar Jani, chairman, Confederation of Indian industry, western region logistics sub committee, at the CII conference on best practices in integrated logistics, in Mumbai today.

Jani, who is the chairman, SCA Group, emphasised the urgency for the government to formulate policies relating to the logistics industry.

Adding to Jan's views, conference chairman Vineet Agarwal, executive director, Transport Corporation of India Ltd, said that enormous increase and ever changing demands of today's customers were the challenges before the logistics industry and to build best practices, the need was to meet the challenges of building adequate infrastructure, products, processes and practices.

"With Indian economy growing at about 8 per cent annually, substantial growth in the domestic and international freight, increasing consumption proliferating to Tier II and Tier III cities and the proposal by the government to invest $17 billion in transport infrastructure by 2010 poses huge opportunities before the logistics industry," said Anil Khanna, managing director, Blue Dart Express Ltd.

Presenting the current scenario in India and across the globe in integrated logistics, Ramesh Srinivas, executive director KPMG, pointed out that though fragmentation is prevalent globally, it is more pertinent in India, with the top 12 third-party logistics providers comprising less than 15 per cent of overall industry.

"Industry margins are constantly under pressure, operational efficiency improvement is a critical success factor", Srinivas emphasised.

Harry Lagad, head of Nokia's Asia Pacific supply chain, pointed out that for India to lead it is necessary to have a global outlook and growth mentality instead of productivity mentality.

"Customers do not exist, they are created and it is the vast difference between competence and competitiveness that can play a crucial role in creating customer," Legad emphasised.

Devdip Purkayastha, chief, strategy, business development, DHL Express Pvt Ltd, felt that a collaborative and long-term mindset with focus on creating joint customer value and reducing total system costs would be the key.