Shaping the next wave: How AI will redefine India’s logistics and supply chain ecosystem in 2026
By Zaiba Sarang, Co-Founder of iThink Logistics
AI has shifted from the fringes to the forefront of India’s logistics ecosystem. As 2025 comes to an end, it is evident that the industry is not merely experimenting with AI anymore; it has fundamentally rewired its operating architecture. Adoption among D2C and SME ecommerce sellers has tripled over the year, delivering measurable outcomes such as faster order resolutions by nearly one-fifth and a sizeable reduction in failed deliveries driven by predictive intelligence. This surge is perfectly aligned with India’s broader digital evolution, where almost half of Indian enterprises ran generative AI pilots, the highest in Asia, supported by the strength of more than 130 billion annual UPI transactions and an e-commerce market that is closing in on the 163 billion dollar mark. With the global AI market already above 371 billion dollars, India is rapidly positioning itself as a strategic hub for digital supply chain innovation.
The year 2025 stands out as a pivotal moment in India’s logistics modernisation journey. AI’s impact has moved well beyond theoretical proof. Courier allocation engines reduced Return to Origin levels by close to one-fifth, significantly improving last-mile economics in a segment where more than half of total logistics costs reside. Predictive non-delivery systems succeeded in recovering nearly three-quarters of delayed shipments, strengthening seller confidence and improving customer experience. AI-enhanced service level governance delivered a strong uplift in metro fulfilment performance, while intelligent forecasting helped brands navigate volatile demand cycles during high-stress events such as Diwali without falling prey to costly overstocking.
This period also saw the sector shift toward more advanced and integrated decision-making tools. Several companies began deploying dynamic delivery planning models that use real-time behavioural signals and historical delivery patterns to predict and prevent RTO events and optimise courier selection. Solutions of this nature, such as our recently launched AI native DDP platform that applies machine learning to delivery decisions at scale, demonstrate how the logistics sector is beginning to operate in a predictive and anticipatory manner rather than reacting to failures after they occur. Early results from these systems point to meaningful reductions in RTO exposure and higher accuracy in non-delivery prediction, signalling a new phase of operational intelligence.
Alongside the industry’s technological progress, government-led reforms under the National Logistics Policy and the PM Gati Shakti masterplan have pushed the sector toward integrated real-time visibility, multimodal transport and stronger infrastructure planning. Drone initiatives, hyperlocal warehouse footprints and machine learning based route optimisation are no longer conceptual pilots. They are now becoming essential components of a logistics network that can support an e-commerce sector expanding at more than 27 per cent annually.
Despite the momentum, the industry continues to face structural challenges. Data quality varies sharply across market participants. Privacy and regulatory expectations are evolving rapidly. Integrating diverse AI systems into complex supply chain environments remains operationally demanding. These realities make it clear that the sector needs consistent data frameworks and robust human-in-the-loop governance to ensure that automated decisions remain transparent, responsible and aligned with a standard of reliability that customers expect.
As India moves into 2026, the logistics landscape is preparing for an even more significant transformation. The domestic AI market is projected to reach 15.9 billion dollars. It is anticipated that every fourth decision in e-commerce logistics will be influenced by AI, marking a shift from predictive systems to agentic, self-optimising architectures. Fleets will begin to manage themselves through digital twins that simulate supply chain behaviours in real time. Conversational AI will replace static tracking with intelligent, personalised delivery interfaces that operate continuously, providing proactive updates and removing the need for manual follow-ups. Visual search, augmented reality try-ons ons and highly personalised recommendations will reshape consumer behaviour, driving higher conversion rates and reducing uncertainty about purchases. AI-driven dynamic pricing engines and generative marketing tools will advance rapidly, especially in India’s tier two and tier three markets. Blockchain-supported hyperautomation is expected to redefine transparency, sustainability and compliance at every stage of the supply chain.
With close to 80 per cent of enterprises expected to deploy these technologies at scale, logistics organisations will make strategic investments in energy resilient operations, regional hub networks and end-to-end AI-enabled warehousing and transportation. The broader logistics sector itself is on a trajectory toward 380 billion dollars in value, with AI at the centre of both operational excellence and competitive advantage.
Leadership teams entering 2026 must prioritise foundational shifts. Data quality must be treated as an institutional discipline, not a corrective action. Courier selection needs to be automated at scale to meet rising consumer expectations, especially now that more than 90 per cent of customers expect same-day delivery experiences. Predictive non-delivery recovery must transition from an optional capability to an operational backbone. Responsible logistics will require that automation and human judgment work cohesively. Governance around explainability, risk, privacy and bias will become a defining mandate as AI becomes embedded in daily operations.
As India’s commerce ecosystem moves toward the trillion-dollar threshold, AI is set to become the defining competitive advantage for logistics companies. The coming year will reward organisations that deploy AI with clarity, maturity and foresight. Those that integrate technological intelligence with human insight will set the next generation of benchmarks and shape a logistics environment that is more agile, more resilient and genuinely world-class. The opportunity ahead is transformative, and the time to architect that future is now.