Ready for Future: India's warehousing sector

Epc World|February 2020

Ready for Future: India's warehousing sector
The warehousing sector in India is at the threshold of a new era. From simple godowns and sheds it is evolving into an organised sector with highly automated warehouse mechanism catering to the distinctive needs of each industry.

As India’s economy is moving towards a growth trajectory with industries witnessing a strong growth, the emphasis is on providing a seamless customer experience with efficient and speedy delivery mechanism. The changing requirement of agricultural & industrial demand has prompted warehousing players to adopt new technologies and expand their areas of services to give a comprehensive delivery solution.

While the increased demand has attracted domestic and foreign players, the policy initiatives rolled out by the Government has propelled the growth further. Moreover, the ongoing trade tensions between the United States and China has posed a major opportunity for India. In recent months, India has been gaining traction as a manufacturing hub for international players.

Demand Drivers

Driven by a strong consumption-led demand by manufacturing sector, 3rd Party Logistics (3PL) players, e-commerce sector, auto ancillary segment, the sector has transitioned from fragmented sheds and godowns to a more organised segment with state-of-the-art warehousing facilities. The transformation has also been augmented by government initiatives, global trade dynamics, an influx of technology and evolving consumption patterns.

In India warehousing occupancy is primarily led by 3PL/ Logistics, Ecommerce, Auto and Ancillaries, FMCG/ Retail and others. The preferences of occupiers and the interest of investors are changing keeping pace with the changing compliances and requirement of businesses. The need for larger facilities and higher quality assets is also attracting top-tier developers with strong global track records. The phenomenal growth of Warehousing sector in recent years is further contributed by the government policy initiatives such as the Goods and Services Tax (GST) implementation and Make in India program, as well as global trade dynamics and evolving consumption patterns.

GST implementation has enabled consolidation of the tax structure across states, which in turn is enabling companies to set up an efficient distribution network. Post GST we would also see development of centrally located warehousing facilities with warehousing management system to optimise their distribution system.

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February 2020