India is eyeing a USD 5 trillion economy soon. It has prepared a detailed roadmap and working tirelessly to achieve the same. The country which is growing comfortably at around 7-8%, is an economic bright spot despite a general gloom in world economy. Its economic expansion is pivoting on the manufacturing and logistic industry. It has unveiled a host of forward-looking economic policies with increased thrust on income generation rather than just production.
As India’s manufacturing has finally picked-up, warehousing demand has risen sharply over the years. In 2023, the total warehousing sector in India was pegged at around 380 million sq-ft equally split into both Grade-A & B assets. By 2030, the warehousing sector in India is slated to cross 700 million + sq-ft growing at a staggering speed of 9-10% yearly. Each year, India is adding around 45-50 million sq-ft of warehousing space. The segment has piqued interest of large investment houses including PE players, pension funds, sovereign wealth funds, etc.
In addition to growth in manufacturing and ancillary industries, a thriving 3 PLs, e-commerce, D2C companies etc. are resulting in accelerated demand for warehousing in India. Besides, GOI and development agencies have also introduced plethora of progressive & high-impact policies that is helping the warehousing and the wider supply chain grow fast.
Aatm Nirbhar Bharat: India is aiming to become self-reliant by developing world class manufacturing services. The Aatm Nirbhar Bharat or self-reliant India is aimed at transforming the country into a global hub of manufacturing, design, and innovation. This is realized through a host of concentrated initiatives such as simplified policies, infrastructure push, incentivizing research & innovation, and an aggressive investment in trade promotion. A host of 35 sectors have been identified including automobiles, auto ancillary, pharma, textile, plastics, defense & aerospace, chemical, etc.
PM Gati Shakti Yojna: In 2021, under the leadership of the current government, PM Gati Shakti Yojna has been introduced aimed at faster execution of infrastructure projects, enhancement of multi-modal connectivity, and encourage better optimization of resources. The ambitious plan will enable increased cooperation between multiple ministries development agencies, and public sector organization, both at centre and state levels. The project is helping improving multimodal logistic capabilities and lowering transportation cost. This is boosting demand for warehousing and cold storages across highways, ports, railway corridors, etc.
PLI schemes: As a part of its long-term ambition of becoming a manufacturing powerhouse, India is stepping up its game and has introduced a host of lucrative PLI (Production Linked Incentives) for a slew of sectors. It has introduced PLIs across a range of sector such as processed food (Rs 12,000 crores), smart phones & transistors (Rs 40,000 crores), man made fibres (Rs 11,000 crores), pharma sector (Rs 16,000 crores), ACC batteries (Rs 18,000 crores), etc. Likewise, it has deployed PLIs to boost manufacturing in other prominent industries such as medical devices, automobiles, auto ancillary industries, ISO containers, defense, etc. These lucrative schemes are incentivizing local entrepreneurs, foreign investors, and business owners to start new manufacturing business or expand their existing capabilities.
National Logistics Policy: India has one of the highest logistics costs across the world, comprising close to 12-14% of the overall GDP. India wants to systematically reduce it to 6-9%, a standard mostly seen on the developed markets. India’s rank in the Logistics Performance Index (LPI) was 44 in 2018. Under the new logistics policy, India aims to reach among the top-10 in the LPI by 2030. It will achieve this through incorporation of digital integration, new capability building, setting up improved benchmarks, unified portal, etc.
New warehousing policy: India has unveiled a new warehousing policy in 2021, which is rendering big push to the industry. Under new policy, warehouse clusters will be built through PPP models. These new warehouses will be built away from city centres in outer skirts and alongside highways to ensure smooth and faster logistics. NHAI will be one of the key entities involved, as the agency has large parcels of lands available with them.
