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In India warehouses become a segment of the rapidly growing logistics industry. Today warehouses do not just provide confinement of goods but also serve various services such as: packaging, sorting, bleding, and processing. The initiative had been taken by the government as set up of FTWZs (Free trade warehouse zones) under the Warehousing Act 2007 to promote and growth of the India Warehousing market.
Warehousing is becoming so important from an industry standpoint for the Indian economy that
Nearly 60% of the modern warehouses are in six cities namely Mumbai, NCR, Chennai, Pune, Bangalore, Ahmedabad, Kolkata and Hyderabad are the major warehousing markets. Current land reserved for India warehousing purposes – 21,163 acres.
MMLPs are expected to serve five key functions: freight aggregation and distribution, multimodal freight transport, integrated storage and warehousing, IT support, and value-added services.
Two MMLPs are planned in the vicinity of Bengaluru (Karnataka) and Guwahati (Assam)
FTWZs are Deemed Foreign Territories / Ports / Warehouse for Storage and Other value-added activities under the Customs Law. FTWZ units can hold inventory on behalf of Foreign Suppliers/ Domestic Buyers.
FTWZ law allows multiple transfers of ownership transactions without removal of the goods out of FTWZ, thus ensuring the trading chain to be as close as possible as may be required, ensuring that there is no cascade of indirect taxes/compliance and taxes/complianceransaction cost.
2. Quality control capability before duty-payment
3. Exemption of GST on purchases and services (including transportation)
4. Availability of Temperature controlled areas for medicines & other human consumption Products
2. Local Tax Exemption (i.e.Zero Rated IGST) on value-added services carried inside the Zone
3. Increased efficiency through lowered reverse logistics through quality control before dispatch from India
2. Exemption from customs and stamp duty
3. Income tax rebate on the profit earned through export transaction
The major segments represent in India warehousing market:
In East and North India
Out of all major segments, Agriculture warehousing has witnessed the highest growth rate of 17.87% of total revenue since 2019. The agricultural warehousing market is valued at INR 145.82 billion and is expected to reach INR 365.75 billion in the coming years.
Today India has a total agricultural warehousing capacity of 91 million metric tonnes and the majority is owned by state agencies. The need for the storage of food and vegetables in agricultural warehousing is constantly growing.
Currently, India’s total warehousing capacity is estimated to be 160 Mn tonnes [Approximately 30% of this capacity is managed by the private sector] and the rest is managed by the public sector [CWC (Central warehousing corporation), SWC (state warehousing corporation), FCI (food corporation of India), state agencies and co-operative sector].
In recent times, the rapid growth in the e-commerce industry is fueling the demand as well as the development of the logistics and warehousing sector of the country. In tier-1 and tier-2 cities, e-commerce retailers have aggressively looked forward to opening up warehouses as well as collaborating with well-known logistics service providers across the country to be able to maintain a minimal delivery cost.
In 2018, the annual transaction of warehouse space in Kolkata reached 4.7 mn square feet from 1.6 mn square feet in 2017, a massive growth rate of 191% in total leasing.
The total warehousing space in the NCR region is close to 110 Million Sq. Ft and an additional 9 Million Sq. It is expected to be added in the next financial year
The Delhi Development Authority has approved the FAR (floor area ratio) in warehousing from 80% to 100% and ground coverage from 30% to 40% to give a boost to warehousing demand in the capital region.
Indian e-commerce sector is expected to drive the demand for organized players in the pharmaceutical and chemic the al industry, 3PLs, auto and auto ancillaries, FMCG, retail in the warehousingand market of India.
The existing trend is on cashing of the economy, there has been an increase in the automobile industry seen in the country. International trade keeps on increasing and strengthening the growth of India’s warehousing market.
Technological advancements taking place such as 3D Printing, AI, and IoT, among others in the Indian warehousing market are further expected to create lucrative opportunities over the next few years.
The warehousing sector has captured the interest of multiple large institutional investors, with an inflow of 3.7 billion USD since 2017. In H1 of 2020, the sector accumulated a considerable 17% total private equity real estate investment.
This sector’s share of total private equity real estate investment in India is keep on increasing [YOkeepsing 2019-2020, the industrial and warehousing segment collected the third-highest share of private equity investments after office and retail.
To better comprehend the expanding demand for infill warehouse space in urban centers, as well as the predicted record-high levels of the new warehouse building. However, land limits and hefty expenses could be viewed as a stumbling block.
This leads us to the conclusion that, in the coming years, a rise in adaptive reuse for industrial tenants is envisaged in retail buildings. The truth is that the United States has far too much retail space. Adaptive reuse enables developers to repurpose a structure that no longer serves the community for a higher and better purpose.
If the warehousing business hopes to increase net absorption totals shortly, various considerations must be taken into account, ranging from ceiling heights to mezzanine floors. Automation is like a steam train that runs alongside warehouses.
More automated functions are possible with higher ceiling heights. Location also has a significant impact on this. Companies find that having warehouses outside of city limits, where they may have to pay a toll levy, is more cost-effective than sitting in traffic in the city center.
Inventory management is particularly important as occupiers attempt to minimize supply chain disruptions by diverting supply sources away from Asia. Then there’s the rising demand for technology and long-term sustainability. To do this, the industry will need to invest heavily in machinery, technology, and artificial intelligence (AI).
In the coming years, industrial demand from both occupiers and investors will continue strong. It is a viable market for e-commerce enterprises, wholesalers, occupiers, and national investors alike because of its diverse business climate. Aside from the east-west corridor, the underutilized north-south corridor and the farthest-west corridor could become hotspots for new warehouse buildings shortly.
A deal has been reached by Singapore-based Ascendas India Trust and Arshiya Group to purchase a 3.30 lakh square foot warehouse in the Arshiya Free Trade Warehousing Zone in Panvel, Navi Mumbai, for Rs 215 crore. Ascendas will buy out Anomalous Infra, the company that owns this recently built working warehouse, and all of its issued share capital.
The executed forward purchase agreement includes the acquisition. From Arshiya Group, Ascendas India Trust purchased six operational warehouses totaling a leasable area.
The seventh warehouse will likewise be leased and run for a term of six years by a subsidiary of the Arshiya Group, just like these other six warehouses. It is anticipated that the purchase of this facility will soon be complete.
Ascendas India Trust is now able to significantly increase its presence in the logistics industry thanks to the acquisition. We are witnessing an increase in demand for the FTWZ logistics category due to the distinctive advantages it provides, and this acquisition puts us in a solid position to take advantage of this expansion.
The first Indian property trust in Asia, Ascendas India Trust, was listed on the Singapore Exchange Securities Trading. Its main goal is to acquire income-producing real estate in India that is mostly used as office space.
Additionally, it may purchase unfinished developments or develop land largely for commercial use with the intention of ownto owne finished.
The India warehousing market size is estimated at XX Crores or $XXM USD in 2024 growing at –% CAGR till 2030.
DHL India has captured a decent market share but has not been able to become a top player in India, Has a strong market presence in the parcels and packages market. Mahindra Logistics Limited (MLL) has a strong presence in the Indian 3PL market, it has a strong presence in the retail and industrial warehousing market
Bengaluru-based developer company Embassy Group, has invested 100 million dollars and has committed to another 250 million dollars. This firm has leased out 3 million sq. ft and is constructing about 7 million more.
IndoSpace the India’s largest developer of industrial and warehousing parks, with 35 warehousing parks and 15 million sq. ft. In the current year, IndoSpace plans to build an additional 5 million sq. ft, backed by PE firm Everstone Group has invested over 3 billion dollars thus far.
