Warehousing in India is a lucrative and desirable asset class of late for sure. The government’s granting industry status to Infrastructure and logistics has opened newer avenues as far as the availability of funds for growth in this sunrise sector is considered. Introduction of GST has galvanized the sector towards an enhanced throughput and industry-wide consolidation. Towards a new regime in Delhi, people have given their verdict and have chosen Narendra Modi yet again to lead the country through to 2024. It’s a reflection on Modi’s performance in the last five years as much as it is an indication of people’s aspiration in the years lying ahead. Their reposed faith in giving a decisive mandate augurs well for a stable government and for sound commerce and economics therein. In the recently concluded budget, the government is committed to investing INR 100 Lakh Crore in infrastructure over the next 5 years. This was much needed and it puts the focus on where the crux lies. The government has proposed to build 125000 km of roads for which investment to the tune of INR 80,250 crores has been allocated.
The Indian warehousing sector is poised for a transformation towards superior Grade A warehousing. Despite the recognition of logistics being a critical driver of economic development, logistics cost in India at 13-14% of GDP, is very high compared to that of USA (9-10%), Europe (10%), and Japan (11%). An efficient warehouse leads to a reduction of 15-20% of the cost in the entire logistics operations.
The Indian warehouse leasing market grew by more than 45% in 2018 and the demand for warehouse leasing in India is likely to touch almost 60 million sq. ft. with e-commerce being one of the key drivers. At least 22 million sq. ft. of this supply is estimated to be in the grade A warehousing category. The warehouse leasing crossed 25 million sq. ft. mark in 2018, which was more than 45% year-on-year growth. E-commerce in the overall warehousing leasing has increased from 10% in 2017 to 23% in 2018. At the same time, India aims to bring down its Logistics Performance Index. The changing consumer behaviour, the onslaught of technical evolution and the continued demand for superior Grade A warehousing space, all of them will together give a fillip to the warehousing in India and the logistics sector. The transformation of Grade B & Grade C warehouses into superior Grade A warehousing facilities is visible now. New technologies such as Artificial Intelligence, Cloud Computing, Blockchain Technology, Internet of Things etc. are being used by the logistics sector to streamline processes and ensure a smoother interface. The increasing demand is being managed with an agile supply all because the system has been in place to allow efficiency and speed.