A warehouse is considered to be an indispensable and one of the most key components of business infrastructure and is regarded as an integral part of the global supply chain system. Logistics, as well as warehousing functions, are deemed extremely important for the storage and transportation of goods all across the country and play their roles in being the fulcrum of procurement, manufacturing and distribution services which are collectively responsible for the development of solid and strong economies.
Present scenario of Warehousing and logistics :
The present logistics cost of the Indian logistics scene accounts for at least 13% to 17% of the GDP of the country which is almost twice as that compared to the USA, Hong Kong and France and can be dedicated to the absence of efficient intermodal and multimodal transport systems. Warehousing approximately accounts for almost 25% of the logistic cost and is raising a number of traditional as well as nascent challenges.
Change in the sector of warehousing and the factors driving it :
Earlier the warehouses were just considered as godowns or strict storage and stockpiling spaces. The ingress of big, organised players in the Indian warehousing sector was minimal as the warehousing authorities or establishments were contented in operating as simple occupiers with fringe partners who would provide low-cost options and a network of small storage facilities in areas with high rates of consumption. Multiple taxes and regulatory impositions made it sensible for warehouse owners to maintain small facilities in each state so as to minimise their costs and there was limited opportunity to invest in automation and for implementing higher throughputs.
But this mentality is gradually changing, owing to a number of factors.
- Requirements from compliance regulators in case of warehousing of sensitive items
- Quality consistency assurance required by clients
- Statutory penalties on non-compliance of warehousing facilities and operations
- Better economies being achieved through sizeable warehouses
- Increased safety and security of goods
- Efficiency in operations
- Better turnarounds
- Shortest response time
- Need for efficient warehousing models and designs
- The advent of e-commerce and several other multinational businesses that usually put a preference in occupying only compliant modes of facilities.
The factors that are creating opportunities in the Indian warehousing sector :
These days, the Indian warehousing sector is considered as one of the most lucrative and prospective markets for the global pioneers in warehousing expertise to invest in. This can be attributed to a number of reforms and actions that have been undertaken solely for the improvement of the indigenous warehousing business.
- The Government has provided infrastructure status to the logistics sector thus granting it a lot of importance.
- Introduction of the Goods and Services Tax.
- Make in India program.
- Development of multimodal transport networks and an array of initiatives like establishment of the Delhi Mumbai Industrial Corridor, the Delhi Kolkata Industrial Corridor and Logistics parks.
- Provision of numerous exit routes to Real Estate investors through Real Estate Investment Trusts.
All these reforms are witnessing an upheaval of leverage in the true potential of the sector by bringing down the costs associated with warehousing and logistics and provision of credible exit opportunities to potential investors. Warehousing in India is gradually becoming a solid and lucrative asset class in the light of commercial real estate development. This structural transformation in the Indian warehousing scenario is going to attract more and more organised players in the warehousing market.