According to a Fitch report, Indian logistics industry was poised for a significant change when the proposal for FDI in multi brand retail was cleared by Cabinet, but with this major regulatory reform delayed, it is likely to be business as usual in the sector.

Fitch Ratings in its '2012 Outlook: Indian Logistics Industry' said that while small unorganised companies would continue to provide stiff competition to the organised sector, large companies with a pan India reach could benefit over the medium term from potential regulatory changes from 2013 onward.

As per experts, the logistics industry in the country is worth around USD 80 to USD 100 billion.

The agency also said the impact of the slowdown in the country's economic growth is likely to be offset by a rise in the use of outsourced logistics. This will result in a slight increase in revenues of third party logistics firms providing transportation and warehousing.

The report said that "Companies are expected to continue to concentrate on their core competencies, leading to the outsourcing of their logistical requirements. Operating profit margins would remain stable, as the cost of diesel is not expected to increase significantly as a percentage of revenues.”

It added that "This is because diesel prices are expected to remain subsidised and increases in other operating expenses (insurance, toll, vehicle interest rates and lease expenses) will probably be passed on as most long term contracts have built in escalation clauses.”

Fitch further said the railways' freight market share is not expected to increase as passenger fares would continue to be subsidised by freight hikes.

It said that "Railways' inability to provide door to door service and lack of sufficient infrastructure continues to restrict its market share. However, road freight transport could witness an increase in market share at the expense of rail freight.”