India’s logistics sector is at a critical inflection point, poised for a paradigm shift driven by sustainability mandates, cost-efficiency imperatives, and evolving regulatory landscapes. With transport contributing nearly 13.5% of India’s carbon emissions and diesel trucks accounting for over 70% of freight movement, the urgency to transition towards Liquefied Natural Gas (LNG) and Electric Vehicles (EVs) has never been greater.
LNG: Steering Heavy-Duty Transport Towards Decarbonization
India’s ambitions to become a gas-based economy are reflected in its goal to increase the share of natural gas in the energy mix from 6% to 15% by 2030. This transformation is particularly relevant for heavy-duty trucking, where LNG presents a viable low-emission alternative to diesel. According to a recent report by NITI Aayog, converting one-third of India’s long-haul trucking fleet to LNG could reduce carbon emissions by 25% and NOx emissions by up to 85% compared to diesel trucks.
Infrastructure expansion is a critical enabler of this transition. The Indian government has approved the establishment of 50 LNG dispensing stations along major freight corridors, with a vision to scale this number to 1,000 by 2035. To secure supply reliability, Indian Oil Corporation (IOCL) and Abu Dhabi National Oil Company (ADNOC) have inked a landmark $7 billion agreement to import 1.2 million metric tons per annum (MMTPA) of LNG over the next 14 years starting in 2026. Meanwhile, Reliance Industries Limited (RIL) and Gas Authority of India Ltd (GAIL) have announced strategic plans to scale up domestic LNG sourcing and distribution networks.
Despite these advancements, challenges persist. The high upfront costs of LNG trucks—approximately 30-40% higher than diesel counterparts—remain a deterrent for fleet operators. However, the total cost of ownership (TCO) parity between LNG and diesel trucks is achieved by fuel arbitrage of LNG over diesel and better fuel efficiency.
EV Adoption: The Acceleration of Zero-Emission Logistics
Parallel to LNG adoption, India is aggressively pushing for EV penetration in urban logistics and last-mile delivery. The Union Budget 2025-26 has further strengthened the EV ecosystem by increasing outlay under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) initiative by 40%, extending production-linked incentives (PLI) for battery manufacturing, and proposing a ₹10,000 crore EV infrastructure development fund.
State governments are also playing a pivotal role. Delhi’s EV Policy 2.0 sets an ambitious target of 27% EV registrations by 2027, with subsidies for commercial fleets. Maharashtra and Karnataka have unveiled similar policies, with Bengaluru earmarking ₹500 crore for charging infrastructure expansion. Additionally, global e-commerce giants such as Amazon and Flipkart have pledged to electrify 100% of their delivery fleets by 2030, further catalyzing adoption.
However, challenges such as inadequate charging infrastructure continue to hinder large-scale EV deployment. The ‘chicken-and-egg’ problem—where low EV adoption discourages private investment in charging stations and vice versa—remains unresolved. The government’s National Electric Mobility Mission Plan (NEMMP) aims to counter this by establishing 6,000 fast-charging stations by 2030, but private sector participation is crucial.
The Road Ahead: A Convergence of Policy, Investment, and Technology
The decarbonization of India’s logistics sector will be a function of strategic collaboration between policymakers, industry leaders, and technology providers. While LNG serves as an immediate bridge fuel for long-haul logistics, EVs are expected to dominate urban freight and medium-distance haulage. The success of this transition hinges on resolving infrastructure bottlenecks, reducing acquisition costs through financial incentives, and fostering technological advancements in battery efficiency and LNG refuelling networks.
With India’s logistics sector projected to grow at a CAGR of 8-10% over the next decade, sustainable mobility solutions are no longer a choice but an imperative. As regulatory frameworks tighten and global supply chains demand greener transport, early adopters of LNG and EV technologies will gain a competitive edge in cost efficiency, ESG compliance, and long-term resilience.
The momentum has begun—how swiftly stakeholders align with this shift will define the next chapter of India’s logistics industry.
