The economic benefits of electrifying the logistics sector in India

This article is authored by Maxson Lewis, Founder and CEO, Magenta Mobility.
Electrifying the logistics sector in India is no longer an option but mandatory for India to be competitive and future resilient. The benefits span across a range of significant vectors benefits, driven by cost savings, job creation, infrastructure development, and environmental improvements.
Cost Savings and Operational Efficiency
Fuel Cost Savings:
Electric vs. Diesel: The cost of electricity for EVs is approximately ₹3-₹4 per kWh, compared to diesel costs, which hover around ₹100-₹110 per litre. Considering that electric vehicles (EVs) can cover about 6-7 km per kWh, this translates to a cost of about ₹0.5-₹0.67 per km for electricity. In contrast, diesel vehicles cost around ₹7-₹8 per km.
○ Annual Savings: A logistics company operating a fleet of 100 diesel trucks, with an average mileage of 1,00,000 km per truck annually, could save approximately ₹70-₹80 lakh annually by switching to electric vehicles, assuming an average cost of ₹7.5 per km for diesel and ₹0.6 per km for electricity.

Maintenance Costs:
Lower Maintenance: Electric vehicles have 40% lower maintenance costs compared to diesel vehicles. This is due to fewer moving parts and the absence of components like the exhaust system and transmission gears. Studies show that the average annual maintenance cost for an electric vehicle can be ₹5,000-₹6,000, compared to ₹15,000-₹20,000 for a diesel vehicle.
Operational Efficiency:
Efficiency Gains: Electric motors are about 90% efficient in converting energy into movement, compared to about 20% for internal combustion engines. This increased efficiency translates into better performance and energy usage in logistics operations.
Economic Growth and Job Creation
Manufacturing and Supply Chain Impact:
Investment: The Indian government’s PLI (Production Linked Incentive) scheme aims to incentivize investments of up to ₹25,938 crore in the EV manufacturing sector over the next five years. This investment is expected to boost domestic production and create around 3,00,000 jobs in the EV ecosystem.
Infrastructure Development:
Charging Stations: The various government initiatives and schemes with allocation of hard funds, supports the development of charging infrastructure facilitating the widespread adoption of EVs and stimulating job creation in the infrastructure sector.
Service and Maintenance Jobs:
Employment: The electric vehicle sector is projected to create approximately 1,00,000 jobs in service and maintenance over the next decade, as per estimates from industry bodies like the NITI Aayog.
Environmental and Health Benefits
Reduction in Pollution:
Emission Reductions: EVs produce zero tailpipe emissions. According to the Centre for Science and Environment (CSE), transitioning to electric vehicles could reduce particulate matter (PM2.5) and nitrogen oxides (NOx) by up to 80% in urban areas, leading to improved air quality.
Healthcare Cost Savings:
Cost Reductions: Improved air quality due to reduced vehicle emissions can lead to lower healthcare costs. The Indian Council of Medical Research (ICMR) estimates that reducing air pollution could save the country approximately ₹30,000 crore annually in healthcare costs related to respiratory and cardiovascular diseases.
Long-Term Economic Stability
Energy Independence:
Reduced Fuel Imports: Electrifying the logistics sector can reduce dependence on imported fuels. In 2022, India spent around ₹8 lakh crore on fuel imports. By shifting to domestic electricity sources, India can decrease its import bill and enhance energy security.
Innovation and Competitiveness:
Global Positioning: As of 2024, India aims to become a global leader in electric mobility. According to the International Energy Agency (IEA), India’s EV market could reach 40% of new vehicle sales by 2030, positioning Indian companies as key players in the global green economy.
Sustainable Growth:
Business Viability: The transition to electric logistics supports sustainability goals and can enhance business viability. A report by McKinsey suggests that the global EV market could grow to $2.5 trillion by 2030, offering significant opportunities for Indian firms to participate in the growing green economy.
Electrifying the logistics sector in India provides substantial economic benefits, from immediate cost savings and enhanced operational efficiency to long-term gains in job creation, infrastructure development, and environmental sustainability. The transition supports a more resilient economy by reducing fuel costs, stimulating job growth, and improving air quality. As India continues to invest in electric mobility, the logistics sector stands to gain from these transformative changes, paving the way for a more sustainable and economically robust future.
Disclaimer: Views and opinions expressed in this article are solely those of the original author and do not represent any of The Times Group or its employees.