To say that India relies heavily on roads is an understatement. As much as three-fifths of transport in India happens through roadways, far higher than some other regions. In the US, the share of road transport is 37%, while it is far lower at 10% in Europe. India’s reliance on road transport is twice that of China’s 30% share, data collated by Nomura Research show.
The reason India relies so much on roads is simply that the network is better than other modes of transport. Factors such as last-mile connectivity, time taken by other modes of transport and limited coordination among road, rail and waterways have led to greater dependence on roads in India.
But a look at the comparable costs of different forms of transportation suggests India is taking the low road. A report by Nomura Research highlights that the costs are the highest in the road sector. It costs Rs2.5/tonne per km to transport goods by road, compared with Rs1.06 by water and Rs1.36 by railways.
However, the ease and positives of road transport have taken precedence over costs. Further, the report also highlights that logistics costs are 2.5-3.5% of the sales costs in India, compared with 0.8-1.5% globally. Three-fourth of this is spent on movement and storage of goods