Nearly Rs 45k crore investment expected warehousing facilities in India: Report
According to a report by JLL India, nearly Rs 45,000 crore is expected to be invested in developing warehousing and storage facilities across the country in the next two years. The growth in warehousing will benefit tier 1 and tier 2 cities such as Surat, Lucknow, Madurai among other. This investment comes at the back of the fact that nearly Rs 10,000 crore was invested in the sector in 2017 alone.
The report said that of all the categories, warehousing is expected to see the highest investment of over Rs 35,000 crore in the next three years, mostly in the creation of storage facilities for retail and consumer goods. Cold storage and agricultural warehousing is likely to see an investment of approximately Rs 7,500 crore. Container storage is expected to attract approximately Rs 500 crore in the same period.
The growth in the warehousing space in the next two years is also expected to create 2 lakh jobs at different levels of specifications and specialisations. The top warehousing locations that will gain from this growth in the sector include Surat, Kanpur/ Lucknow, Ranchi, Madurai, Coimbatore, Ludhiana/Ambala, Tiruchirapalli, Nasik and Jaipur, the report says.
Amongst the Tier 2 cities, these cities have shown strong growth characteristics that will allow them to emerge as warehousing hubs in the hub and spoke model. These cities are strategically located close to other major markets and provide favourable policies to set up businesses and have high manufacturing potential, it says.
“Warehouse and logistics is one of the biggest growth areas that has emerged in recent times. We have seen Rs 1.25 lakh crore invested through private equity in warehousing space since 2014. While it made up approximately 10 percent of total PE investment in 2017, the share is expected to grow – claiming a larger share of investment. India’s logistics and warehousing sector is rapidly transitioning through a revolutionary phase. There have been multiple initiatives associated with large investments (both domestic and international) within this segment, clearly underscoring the upcoming trend. With India’s logistics industry recently rewarded with infrastructure status, thereby providing the impetus for added interest and therefore investments,” says Ramesh Nair, CEO and Country Head, JLL India.
The report notes that the two prominent changes that have created significant growth prospects in warehousing are the implementation of GST in India and the rapid growth of e-commerce necessitating the building of large-scale warehousing across various locations.
The report states that the overall growth in e-commerce and shortened turnaround time for delivery has necessitated growth in warehousing in the country. Apart from e-commerce, the next big sector that will see growth includes the electronic and white goods segment that require significant warehousing space in urban and semi-urban locations.
It is estimated that Grade A and B warehousing stock will grow at a CAGR of 21 percent year –on – year taking the total tally of warehousing space in India to 247 million square feet (mil sq ft) by the end of 2020 almost doubling the current warehousing stock of 139.8 million square feet in 2017.