RISE OF GRADE A WAREHOUSING IN INDIA
The opportunities abound for the warehousing segment especially with industrial development and infrastructure expansion of the country. As N Shridhar – CEO- Greenbase Industrial & Logistic Parks says, “Over the coming few years, the Indian warehouse industry will grow significantly as our economy overcomes the odds of global geopo- litical turmoil. The government is focused on strengthening its global competitiveness by investing in fac- tors such as expanding infrastructure networks, developing last-mile connectivity, implementing the GST, adapting automation technology,and adopting beneficial govern- ment policies. The above measures will play a pivotal role in improving warehouse operational efficiency, rising yields, creating jobs, attracting investments, and reducing logistical costs to 8%.” Rajesh Jaggi, Vice Chairman –Real Estate, The Everstone Group adds, “The industrial and logistics warehousing market in India pres- ents a compelling and strategically significant real estate asset class underpinned by favourable market dynamics and government-led ini- tiatives. Its resilience and stability are at the heart of this asset class's appeal. The prevalence of long-term lease agreements and con- trolled rent escalations provides a solid foundation for consistent cash flows and reliable returns. Moreover, the exponential growth in demand from sectors like manufacturing, 3PL, ecommerce and retail speak of the strategic importance of this asset class. The Indian warehousing sector is uniquely placed to lever- age these megatrends, cementing its role as a critical enabler of the country's economic growth. The government's role in catalyzing the warehousing sector's development is equally crucial. Initiatives like the National Logistics Policy, with its goal of reducing logistics costs to below 10% of GDP, demonstrate a clear commitment to enhancing the sector's operational efficiency and competitiveness. By aligning our vision with the government's policy directives and leveraging the sector's inherent strengths, we can unlock unprecedented value and position the industrial and logistics market as a cornerstone of India's economic resurgence.” Madhusudhan Gunda, Chairman & Managing Director, Sumadhura Group shares, “India's industri- al market is showing robust growth, with the manufacturing sector, pro- pelled by government initiatives such as Make in India, contributing 25% to GDP and employing 30% of the workforce. Effective warehousing can boost businesses by providing a 20% cost reduction, 30% improvement in order accuracy, and a 25% increase in customer satisfaction and repeat business. Warehouses are moving closer to production hubs in cities like Chennai, Hyderabad and Bengaluru bolstered by the government's infrastructure push-dedicated freight corridors and industrial corridors are streamlining logistics. It is worth noting that more than half of India’s warehousing stock is con- tributed by Delhi NCR, Mumbai, and Bengaluru. The logistics industry's recent infrastructure status and ini- tiatives like the PM Gati Shakti plan further has made investors happy. It has translated to a space boom. Total warehousing stock in major cities jumped 15% year-on-year in 2023, with Grade A and B spaces leading the charge. As demand outpaces supply, vacancy rates are plummeting, creating a prime market for modern, high-quality warehousing solutions.” While the Indian warehousing Industry holds a lot of promise, what are the challenges that need to be addressed? N Shridhar is of the view that the dominant factors like economic resilience, GDP growth, and domes- tic consumption, China Plus One policy, robust infrastructure net- work, and demographic dividends played a pivotal in driving sustained demand. “As the spillover effect of pandemic-led disruptions seems to be subdued, the warehousing in- dustry continues to face challenges like higher logistics costs, delayed approvals, lack of clear land titles, complex regulatory compliances, and volatility in real estate raw material costs. Additionally, global headwinds continue to impact economic and business sentiment with high inflation, muted private capex, compressed profit margins, and tax burden. Addressing these challenges will require collaborative efforts from industry stakeholders, government intervention to stream- line regulations, and strategic invest- ments in technology, infrastructure, and talent development to drive the sustainable growth of the warehous- ing and logistics sector in India,” he added. Madhusudhan Gunda, agrees that India's warehousing industry is full of potential, but to truly flourish, we must address some key challenges. “Our infrastructure, particularly transportation networks, including roads and rail, need an upgrade to ensure smooth movement of goods. There is a concerning skills gap – the demand for qualified warehouse workers far outstrips the available talent pool. Investing in training programs is essential to bridge this gap. Additionally, complex regula- tions and a lack of transparency in land acquisition can create hur- dles for warehouse development. Streamlining these processes can significantly incentivize growth in the sector. From the workforce point of view, creating a positive work environment that prioritizes well-being, recognizes contributions, and offers clear career advancement paths fosters a sense of value and long- term commitment from employees. By prioritizing these strategies, companies can cultivate a loyal and thriving workforce.” What have been the important de- velopments for your Company in the warehousing segment in recent years? “As India’s largest warehouse developer and operator, IndoSpace has continued to anticipate industry trends and proactively met evolving needs, taking our national footprint to 52 Grade A logistics parks across 11 cities today. Our significant presence in key industrial hubs like Chakan Pune (500+ acres) and Oragadam in Tamil Nadu (400 + acres) serve major logistics, man- ufacturing, and automotive indus- tries. The expansive reach of over 600+ acres across the NCR facili- tate inter-state commerce. More- over, the newly launched INLOGIS Chembur facility in Mumbai is of- fering flexible in city warehousing solutions,” said Rajesh Jaggi Talking about the future plans he added, “IndoSpace has a planned growth strategy for the next decade. Currently, we are in the process of deploying our fourth fund which should add another 20-25 million square feet to our portfolio in the next 2-3 years. With a strong foot- print across India, IndoSpace plans to deepen its presence in 11 existing markets and expand into the top eight tier-I markets within the next three years. IndoSpace is also dedicated to enhancing sustainability by integrating green infrastructure designs, such as rooftop solar panels, natural ventilation, eco-friendly materials, and water conservation measures, to minimize the carbon footprint and promote efficient busi- ness operations.” Greenbase, the Hiranandani-Blackstone JV platform, has forayed into the development and leasing of Industrial and Logistics Parks since 2019. N Shridhar elaborates, “The company has a healthy portfolio mix, comprising 70% in- dustrial buildings and 30% warehouses. To date, the platform has delivered over 5 mn sq.ft of leased space across regions like Oragadam near Chennai and, Talegaon in Pune. Its unique expertise lies in land development, robust process, timely approvals, precision engineering, financial acumen, quality, design efficiency and committed delivery. The company intends to actively expand its footprint across metros and tier cities. Besides the existing parks in Chennai, Pune, and Nashik, the group has acquired an additional 90 acres of land parcel in MMR, Chennai, and Bengaluru, and it has tie-ups for another 150 acres. The company is optimistically evaluating land acquisition opportunities in MMR, Noida, West Bengal, Bengal- uru, and other promising markets in the advent of robust infrastructure development. This bullish outlook is derived from a sustainable demand from the dominant players across E-commerce, Automotive, Renew- ables, FMCG, EV, Manufacturing, and lightweight Engineering industries.” Sumadhura Group embarked on an exciting new chapter of warehousing, leveraging its three-decade legacy of building 11 million square feet of best-in-class properties in Bangalore and Hyderabad. “Now we're proud to introduce Sumadhu- ra Logistics Park, our Warehousing Solution in Bangalore, said Madhu- sudhan Gunda He shared, "Strategically locat- ed in Hoskote, East Bangalore, to serve warehouses increasing de- mand. Sumadhura Logistics Park is Sumadhura’s first built-to-suit warehousing project, largest in Bangalore city. The state-of-the-art logistics and warehouse park sprawls across 100 acres and of- fers 2.5 million square feet of commercial warehouse space. This is a Grade A+ warehousing facility and is strategically located to provide easy access to key industrial and manufacturing clusters, as well as consumption markets within the city. Recently we have leased three lakh sq.ft built-to-suit warehousing space to the Zomato, their largest in India. Sumadhura Group plans to invest 600 crore in the first phase of development of the Logistics Park, and aims to increase the total warehouse space to 6 million sq.ft. in the second phase.” “As India's digital transformation accelerates and its consumer market expands, the need for sophisticated, high- quality logistics and infrastructure solutions will only intensify" -Rajesh Jaggi Addressing the challenges will require collaborative efforts from industry stakeholders and government to streamline regulations and strategic investments in technology, infrastructure, & talent developmen- N Shridhar Keeping pace with the ambient growth, the warehousing sector is experiencing a surge, and is projected to reach $35 billion by 2027 (CAGR 15.64%) with at least 40% Grade A stock - Madhusudhan Gunda
Tags : Rajesh Jaggi N Shridhar Madhusudhan Gunda INDIA'S WAREHOUSING SECTOR GOVERNMENT POLICIES INSTITUTIONAL INVESTMENTs TECHNOLOGICAL ADVANCEMENTS GROWTH STORY