E-Paper
India needs a shock-proof freight system
This article is authored by Sharvari Patki and Saudamini Zutshi.
As India marks National Logistics Day on June 28, investments in highways, dedicated freight corridors, multimodal infrastructure, and digital logistics platforms are steadily improving the movement of goods across the country. These efforts are reducing logistics costs, strengthening supply chains, and supporting India's ambition of Viksit Bharat 2047.
Yet, recent events have exposed a vulnerability that roads and warehouses alone cannot solve.
A preliminary US–Iran agreement was signed on June 18 to end months of conflict and begin reopening the Strait of Hormuz — a narrow channel through which a significant share of the world’s oil trade passes. For India, that news spells relief but it does not ensure security. The crisis may ease; but the vulnerability it laid bare still exists.
During the conflict, rising crude prices translated quickly into higher diesel costs. Truck operators, already running on thin margins, passed these increases on through fuel adjustment mechanisms. Logistics buyers and manufacturers absorbed part of the burden. Eventually, it reached the ordinary household — in the increased price of LPG cylinders, vegetables, flour and other essentials.
With El Niño-induced uncertainty around the monsoon clouding the outlook for food production, the increase in transport costs did not arrive in isolation. It compounded an inflation risk that was already building from an entirely different direction. Two unrelated shocks, converging at the same chokepoint: The cost of moving goods from farm and factory to market.
Road transport carries an estimated 71% of India's freight, and diesel trucks are its backbone. Though diesel trucks make up a small share of vehicles on Indian roads, they consume a disproportionate share of transport diesel — which means fluctuations in a global oil market, set in dollars by forces entirely outside India's control, transmit directly and quickly into the cost of moving everything the country eats, builds and sells. Every oil price spike, in effect, acts as an external tax on the Indian economy.
Electricity is different. It is a domestically generated and increasingly diversified input — drawn from coal, hydro and a rapidly expanding renewable energy base. While fuel is one of the largest and most volatile line items in a transporter's ledger, electricity pricing tends to be far steadier, letting fleet operators plan, manage risk, and quote freight rates with more confidence.
In this sense, electric freight can become a shock absorber for the economy — diffusing oil price volatility instead of transmitting it down the supply chain to the consumer. It carries a second benefit too: the same diesel trucks responsible for an outsized share of transport diesel use also account for a disproportionate share of particulate matter and transport-linked carbon emissions. So, the shift will address a public health cost that has so far gone largely unpriced.
India's net oil and gas import bill jumped 75% year-on-year in May 2026, even though the country bought almost the same volume of crude as the year before. The Indian crude basket, fairly stable in the $62-70 a barrel range through much of the past financial year, briefly reached approx. $115 a barrel in March as the Strait of Hormuz came under threat. India did not consume more oil — it simply paid far more for the same barrels, while a rupee sliding past ₹95 to the dollar made each of those dollars costlier still. This is what a fuel shock looks like: a disruption thousands of kilometres away, transmitted within weeks into the price of diesel at an Indian highway pump, and eventually to the family grocery bill.
This is precisely the transmission a shock absorber is built to interrupt. It does not eliminate the bump in the road; it stops that bump from being felt, in full force. When a meaningful share of freight runs on electricity, rather than on imported diesel, that bump is cushioned before it reaches the consumer, instead of being passed through fuel adjustment mechanisms.
An economy that wants to lead cannot keep importing its vulnerability
Every litre of diesel an Indian truck saves keeps a dollar from flowing out to Gulf refineries – and a rupee shielded from the next oil-shock disruption. For a country aspiring to be among the world's three largest economies and a global manufacturing hub, freight volumes will only keep growing.
India's electric truck market is gaining momentum, with feasible early-stage deployments across several use cases and charging infrastructure gradually expanding. What would help in mainstreaming is the same kind of regulatory clarity that fuels efficiency norms of passenger cars. While published roadmap for phased sales mandates and credit support exists, moving it from an advisory document to a settled framework, alongside clearer residual-value benchmarks for financiers, will give manufacturers and fleet owners greater confidence.
India's logistics future will be shaped by better roads, smarter supply chains and modern infrastructure. It will be shaped equally by the choices made about the energy that powers these supply chains. Strengthening freight to withstand fuel shocks is not merely an environmental goal — it is an economic opportunity hiding in plain sight. With the building blocks of technology, early market momentum and policy direction now in place, the next task is to give India's freight sector the same energy independence like the power sector.
(The views expressed are personal)
This article is authored by Sharvari Patki, programme director, electric mobility & Global South partnerships, WRI India and Saudamini Zutshi, business development and partnerships manager, Purpose.
