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Tech-Enabled Intra-City Logistics Boost MSME Efficiency
Articles- Feb 06,26
A C-DEP–IIT Delhi study shows how technology-enabled intra-city logistics is cutting costs, improving delivery reliability and expanding market reach for MSMEs, while flagging key GST and policy risks.
The Centre for Digital Economy Policy Research (C-DEP), in collaboration with IIT Delhi, released its report titled “Study of Technology-Enabled Intra-City Logistics for MSMEs” at India Habitat Centre, New Delhi. The report assesses the role of tech-enabled goods transportation services in improving the logistics cost and efficiency for Micro, Small and Medium Enterprises (MSMEs).
The report was released by the Praveen Khandelwal, Member of Parliament and Secretary General of Confederation of All India Traders (CAIT) and Ashwini Mahajan, Co-Convener of Swadeshi Jagran Manch.
MSMEs contribute to nearly 30 per cent of India’s GDP and 45 per cent of industrial output, yet face persistent challenges in intra-city goods movement, including high transport costs, unreliable vehicle availability, and delays in transportation of goods. Based on interviews with MSMEs, tech-enabled goods transportation service providers, and analysis of aggregated data from these service providers, the study finds that technology-enabled goods transportation services have become a key enabler of day-to-day business operations for small businesses.
Dr Jaijit Bhattacharya, President of the Centre for Digital Economy Policy Research (C-DEP), observed that, “A significant share of logistics costs within road transport arises from intra-city goods movement. Technology-enabled goods transportation services are delivering tangible benefits for MSMEs by reducing intra-city logistics costs. Beyond cost savings, these services improve operational reliability and time efficiency, creating scope for higher MSME earnings and measurable gains in labour productivity. If higher taxes make these services unaffordable, MSMEs lose a tool that improves efficiency and customer trust. Better clarity would ensure that technology adoption is not penalised.”
Key findings show that business users account for approximately 71 per cent of users on tech-enabled goods transportation services, while contributing nearly 97 per cent of all intra-city goods transportation orders across two-wheeler, three-wheeler and four-wheeler vehicle categories. Among surveyed MSMEs, 73 per cent reported lower transportation costs, 95 per cent experienced improved on-time transportation of goods, and nearly 27 per cent expanded their customer reach due to access to on-demand logistics. Faster vehicle availability and access to right-sized vehicles enable MSMEs to complete more order per day, reduce coordination time, and mange priority consignments without investing in owned fleets.
The study also highlights emerging policy and regulatory risks that could undermine these efficiency gains. In particular, GST 2.0 risks misclassifying digitally booked goods transport services as “Local Delivery Services,” potentially increasing the tax burden from 5 per cent to 18 per cent for many MSMEs. Such an increase could raise per-trip logistics costs by over 12 per cent, disproportionately affecting small businesses operating on thin margins. The report cautions that higher costs may push small businesses back towards informal, cash-based transport options, reversing progress on formalisation, transparency, and service reliability.
The report also draws attention to broader ecosystem transition considerations. Small independent transporters face significant barriers in moving toward formalisation, including navigating compliance processes, documentation requirements, and access to digital infrastructure. In parallel, state government initiatives to encourage fleet electrification, particularly in higher-payload freight segments, represent an important step toward sustainable mobility. As this transition progresses, continued alignment with electric vehicles availability and charging infrastructure expansion will help ensure that logistics services remain affordable for MSMEs during the transition phase.
To address these challenges, the report recommends clear regulatory clarification under GST, promotion of gradual formalisation of informal transport operators through digital public infrastructure, and targeted PLI based support to enable an orderly transition to electric freight vehicles without raising logistics costs for MSMEs.
intra-city logistics
cutting costs
MSMEs
Digital Economy Policy Research
Study of Technology-Enabled Intra-City Logistics
Habitat Centre
Praveen Khandelwal
road transport
goods transportation services
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