This report gives a detailed analysis of the trends in the Indian Logistics and Warehousing Sector.
Contrary to the grim picture that the COVID-19 pandemic has painted on the other industries, the Warehousing and Logistics segment has grown exponentially. The reason for this sharp rise is due to the growing demand of goods and delivery services, and this momentum is likely to continue in the near future. The sector is amongst the best performing assets as e-commerce, FMCG and pharmaceutical entities look to penetrate deeper into tier II and III cities.
India is well-positioned to be on the path of growth in terms of warehousing and logistics, primarily boosted by digitization and surge of e-commerce. An increase in the production of indigenous products, the demand for larger and more organized distribution centers along with location specific warehousing will be the need of the hour.
On the policy front, the government has made multiple reforms to mitigate the perceived challenges. Implementation of GST, Infrastructure status to logistics sector, 100% FDI, low credit risk, shorter construction cycles, and warehousing policies for most states are already in place.
As part of the Atmanirbhar Bharat pursuit for self-reliant India, the central government announced an INR 20 trillion (USD267 billion) package of collateral free loans and equity financing to build manufacturing capacities across sectors, and to promote local products in for FY2021.
Segments such as cold storage, agri and industrial warehouses have received attention from government and stakeholders alike. It is estimated that Industrial and warehousing space absorption will grow 83% y-o-y to 47.7 m sq. ft. in 2021, driven by robust growth in ecommerce and manufacturing. The chemical storage and logistics market has also been driven by urbanization, rise in demand for modernized green warehouses in chemical industry, followed by growth in demand for energy conservation and increase in shifting of chemical manufacturers from its traditional centers.
The co-warehousing segment is also witnessing swift growth at the start of this decade on the back of rising demand for last mile connectivity and increased preference amongst manufacturers and logistics companies as it gives them better operational control and provides scalability to their businesses. Another aspect that is still at a nascent stage, but is expected to gather momentum is the REIT market.
Warehousing is backed by institutional investments making it an attractive asset class that has not yet seen participation by the retail segment. Once this gains eminence in the coming decade we will see the sector realizing its potential in entirety.
India is well-positioned to be on the path of growth in terms of warehousing and logistics, primarily boosted by digitization and surge of e-commerce. An increase in the production of indigenous products, the demand for larger and more organized distribution centers along with location specific warehousing will be the need of the hour.
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