Photo Credit: CNBC-TV18

Chennai’s autorickshaws could unlock cleaner, cheaper last-mile delivery for MSMEs, easing congestion, boosting driver incomes, and plugging a critical gap ignored by big-ticket logistics infrastructure.

Chennai is often called the automobile capital of India—and for good reason. In 2024, the city produced nearly 30% of India’s automobiles and 35% of its auto components. A strong mix of global manufacturers, suppliers, ports, and highways has made Chennai a key manufacturing and logistics hub.

As Tamil Nadu pushes to become a global manufacturing powerhouse, the next big challenge isn’t just factories or highways. It’s how goods move within the city. Urban goods transport remains slow, costly, polluting, and poorly adapted to Chennai’s dense streets.

Logistics is growing – but the last mile is lagging

Chennai’s logistics sector is expanding fast. By September 2025, Grade-A warehousing space grew 135% year-on-year to 4.1 million sq. ft, driven by automobiles, engineering, and port-led trade. The Tamil Nadu Logistics Policy 2023 aims to connect ports, roads, railways, and freight corridors into one efficient system. The upcoming Multimodal Logistics Park at Mappedu is expected to strengthen this network further.

But these big infrastructure projects largely ignore a crucial problem: how goods actually reach shops, workshops, and customers inside the city.

MSMEs bear the brunt

Tamil Nadu has over 4.5 lakh registered MSMEs. These small businesses depend on fast, affordable local transport. Instead, they face delays, rising costs, and unreliable deliveries due to traffic congestion and narrow roads.

Large delivery vans are increasingly impractical in many parts of Chennai. Parking is scarce, fuel is expensive, and traffic is unpredictable. According to the Centre for Science and Environment, transport alone can make up 30–35% of logistics costs in Indian cities—mostly because of inefficient movement within cities.

Solving this problem needs smaller, smarter, and cleaner solutions. Chennai already has one.

Autorickshaws: Hiding in plain sight

Over 1.2 lakh autorickshaws operate in the Chennai Metropolitan Area. They already navigate narrow streets with ease and form the backbone of urban mobility.

If allowed to carry both passengers and light goods, autorickshaws could play a major role in last-mile delivery. These “dual-use” autos could carry small cargo loads (up to 150 kg), which is ideal for most intra-city deliveries.

They could carry passengers during peak hours and switch to goods during off-peak times—making better use of vehicles that otherwise sit idle for hours.

Integrating dual-use autorickshaws into Chennai’s upcoming City Logistics Plan could create a low-cost, scalable, and locally suited solution for MSMEs.

Better incomes, better logistics

This model also helps auto drivers. A Civitas Consultancies study found that 7 out of 10 drivers rent their vehicles, while most owners rely on informal debt. Income is unstable, and fare regulation delays make matters worse.

Allowing autos to carry goods during low passenger demand could increase daily earnings by 20-30%. Instead of waiting for rides, drivers could deliver goods for nearby shops and businesses. At the same time, logistics companies gain access to a flexible, city-wide delivery network without investing in new vehicles.

What needs to change

The biggest hurdle is regulation. Updating vehicle approvals to allow higher cargo limits and easing rules that separate passenger and goods vehicles would unlock this model quickly. Small legal changes could create large economic and environmental benefits.

A smarter way forward

Chennai’s rise as a logistics hub doesn’t have to rely only on bigger trucks and bigger roads. Sometimes, the smartest solution is already on the street. By rethinking the role of autorickshaws, Chennai can build a last-mile logistics system that is efficient, inclusive, and environmentally friendly – turning an everyday vehicle into a quiet but powerful innovation.

The article was originally published in CNBC TV18.

Lakshmi Ramamurthy is a Senior Researcher at CIVITAS Consultancies.

Views expressed by the authors are personal and need not reflect or represent the views of the Centre for Public Policy Research (CPPR).

Lakshmi Ramamurthy

Hon. Trustee (Data Analytics & Corporate Management) at CPPR | [email protected] | Website |  + postsBio

Lakshmi Ramamurthy serves as an Honorary Trustee (Data Analytics & Corporate Management) at the Centre for Public Policy Research (CPPR). With over 18 years of experience, Lakshmi is an expert in data analytics across urban mobility, transport safety, regulatory, operations, insurance, IT, retail, and public policy.

Currently, she leads a Data & Analytics team within a state government department in Australia, applying her expertise to develop data-driven solutions that address public sector challenges.

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