Cleaner roads, richer drivers: How dual-use vehicles, smarter operations can revolutionize India’s freight sector

But as commerce grows and delivery expectations sharpen, freight is also turning into a major driver of the congestion, energy use and transport emissions.

The way forward rests on 2 linked goals:

• Speeding up the transition to cleaner vehicles
• Squeezing more efficiency out of every vehicle already on the road

Scale of the challenge: Freight’s outsize footprint

Dr OP Agarwal, the former joint secretary in the Ministry of Housing and Urban Affairs and currently Professor of Practice at the Indian School of Public Policy, and Pawan Mulukutla, Executive Director of Integrated Transport, Clean Air and Hydrogen at WRI India, have highlighted the urgent need to rethink India’s urban freight sector.

Mulukutla pointed out that although freight vehicles account for less than 3 per cent of India’s total vehicular population, they consume a disproportionate 64 per cent of the nation’s diesel and are responsible for 34 per cent of road transport emissions. This imbalance is driven by the heavy-duty nature of freight operations, long-haul routes and the dominance of diesel-powered trucks and commercial vehicles.

“With the rapid growth of e-commerce and quick-commerce platforms, the number of freight trips is expected to increase significantly, putting additional strain on urban roads, air quality and energy infrastructure,” the WRI report quotes the ex-joint secretary as saying.

The experts stressed that the challenge is not limited to shifting to electric freight vehicles. Electrification alone will not deliver the desired environmental and economic gains if vehicles continue to run empty, follow inefficient routes or operate with low load factors. A dual strategy—combining cleaner vehicles with smarter, more efficient operations—is essential to fully realise the potential of sustainable urban freight in India.

Policy push: PM E-DRIVE and the clean mobility agenda

Recognising the need to accelerate the transition, the Government of India launched the PM E-DRIVE Scheme in 2024. With an outlay of Rs 10,900 crore, this is one of the biggest pushes towards clean mobility, supporting electric vehicle adoption, charging infrastructure and domestic manufacturing, as per the PIB report.

The scheme aims to catalyse demand for electric trucks, three-wheelers and other low-emission delivery vehicles, while simultaneously strengthening the ecosystem that enables their widespread use. Electric trucks, three-wheelers and other low emission delivery vehicles can reduce tailpipe emissions, improve air quality and help India advance its climate goals. 

But for electrification to deliver its full potential, it must be supported by adequate charging infrastructure, affordable financing, reliable supply chains, robust manufacturing capacity and forward-looking policy support. Without these enablers, the transition risks being slow, uneven and inaccessible to the small operators who form the backbone of India’s freight economy.

Boosting driver incomes can accelerate India’s electric vehicle transition

This transition must also work for the people who move goods every day. Across India, most commercial drivers and small fleet operators work on narrow margins. For many, transitioning to an electric vehicle is a daunting financial undertaking. Vehicle loans, uncertain earnings and volatile fuel prices make the prospect of upgrading to cleaner technology a significant burden. Improving the earning potential of existing assets can strengthen operators’ financial resilience and make the transition to cleaner vehicles more feasible.

Policies and business models that increase vehicle utilisation, reduce dead mileage and unlock new revenue streams can help drivers and small operators build the financial cushion needed to invest in electric vehicles. The goal is not just cleaner roads, but also more secure livelihoods for those who power the freight economy.

Passenger and freight transport have traditionally been treated as two separate systems. India has one of the world’s largest autorickshaw (commercial three-wheeler)  fleets, yet most of these vehicles remain dedicated exclusively to passenger transport. Many autorickshaws spend a significant part of the day underutilised. Allowing the same vehicle to transport passengers and goods at different times can unlock substantial efficiency gains.

A WRI India research paper indicates passenger autorickshaws can effectively transport goods weighing between 30 and 300 kg, a segment that currently falls between two-wheelers and larger cargo vehicles. Instead of deploying more freight vehicles into already congested cities, existing autorickshaws could transport goods during periods when passenger demand is low. This approach can help meet growing freight demand and improve utilisation of vehicles already in service.

A smarter way to earn: Freight trips could raise autorickshaw incomes by 15%

The economics are equally compelling. The research further found that many autorickshaw drivers spend between one and four hours each day waiting for passengers. Freight demand follows a different rhythm. Passenger trips peak during the morning and evening commute, while freight demand is concentrated through the middle of the day. That creates a natural opportunity for drivers to carry freight during otherwise idle hours without affecting passenger services.

The result is a potential 15% increase in driver incomes while improving vehicle utilisation from an estimated 30–35% to nearly 60%. Vehicles that otherwise run empty can carry freight instead, reducing dead mileage and improving overall efficiency. Electric autorickshaws, with a lower centre of gravity and better weight distribution than conventional ICE vehicles, are also well suited for carrying both passengers and moderate freight. For many drivers operating on thin margins and often servicing vehicle loans, the additional income can improve household resilience, accelerate debt repayment and strengthen their ability to invest in cleaner vehicles in the future.

One of urban freight’s biggest inefficiencies is not the type of vehicle itself, but how effectively it is utilised. Empty return trips, poor route planning, fragmented deliveries and low load utilisation continue to drive up fuel consumption, operating costs and emissions. Digital freight companies and emerging technologies can play a critical role in addressing these challenges.

Better route optimisation, data-enabled trip planning, dynamic load matching and demand forecasting can reduce empty miles, improve load utilisation and consolidate consignments across operators. These are improvements cities can achieve today, without waiting for complete fleet electrification. By leveraging data and digital platforms, logistics operators can make every trip count, reduce wastage and lower their carbon footprint.

From EVs to efficiency: The next phase of India’s urban freight revolution

While governments continue investing in cleaner vehicles and the infrastructure that supports them, logistics companies must also embrace digital tools that maximise asset utilisation. Simultaneously, decision makers should explore innovative business models, such as the dual use of vehicles already on the road, that improve efficiency without adding more vehicles to city streets. Most importantly, every intervention must place drivers and small operators at its centre, ensuring that those who power the freight economy are beneficiaries of the transition.

The future of urban freight will not be built through electrification alone, nor can it be built without it. It will require clean vehicles, smarter logistics, intelligent technology and innovative business models that allow every vehicle to deliver greater environmental, economic and social value. By combining policy support, technological innovation and a focus on livelihoods, India can build a freight system that is not only cleaner but also more inclusive, efficient and resilient.