Warehousing plays a key role in the entire logistics and supply chain ecosystem. India’s warehousing sector has grown dramatically in recent years, going from godowns to Grade A facilities. The main drivers of this increase are implementing the Goods and Services Tax (GST), the expansion of the manufacturing sector, and the growing penetration of e-commerce. In addition, the warehousing sector has seen significant transformation due to supply chain management reforms and the rapid progress of technology.
There is a surge in demand for Grade A warehouses outside the major markets like Mumbai, NCR, Pune, Chennai, Bengaluru, Kolkata, Hyderabad, and Ahmedabad. Investors have shown a lot of interest in this. According to ICRA, the overall supply witnessed a CAGR of 17 percent during 2016-2021 to 258 million sqft, with an increase in the Grade A supply mix from 30 percent in 2016 to 45 percent in 2021. The sector attracted around Rs 26,500 crore investment between FY2017 and FY2022 from various global logistics operators and foreign investors.
The e-commerce boom and the much-needed push from the governmental front have fueled the need for large-scale warehouses. The National Highways Authority of India (NHAI), which will create and administer the new planned warehousing policy, aims to lower logistics costs and make transportation easier by creating exclusive warehousing zones under a public-private partnership (PPP) model.
“One of the most important elements of the supply chain ecosystem is warehousing. The industry has been gradually changing once we improve this asset class, wastage decrease, and business efficiency and effectiveness significantly increase, according to a staff member from the logistics company.
He added that Grade A facilities now provide more than 10% of all contributions, up from a three percent average till 2017. The demand and supply are in balance. Additionally, efforts are being made to create technologically advanced storage facilities with the realization of the value of Grade A facilities.