India’s logistics sector has come a long way from being a traditional storage and distribution system to a well-managed supply chain that focuses on quality, efficiency and cost management.
Propelled by the Central Government’s pro-business policies, initiatives such as the National Manufacturing Policy aim to increase manufacturing’s share in the GDP to 25%. The ‘Make in India’ movement places emphasis on building best-in-class manufacturing infrastructure, and there is a push underway to develop infrastructure through inter-state industrial corridors, with supporting rail freight lines. Consequently, the logistics sector in India is being transformed.
The logistics sector can be broadly classified into three areas – transportation, distribution and storage, and it is the storage sector that has recently garnered attention from developers and private equity investors in the National Capital Region (NCR) of Delhi. Its strategic location, a large population base and being one of the largest manufacturing hubs in the country makes NCR one of the leading warehousing nodes in India.
Being the gateway to North India, warehousing in NCR operates on a hub and spoke model, wherein it receives products from various origins, consolidates them and sends them directly to nearby urban centres. It also houses large inland container depot (ICDs) with provisions for railway sidings, thus connecting to ports such as Jawaharlal Nehru Port Trust (JNPT) and Mundra near Mumbai.
Currently, NCR’s total stock of warehousing space is estimated to be 223 million sq ft, of which more than 80%, or 187 million sq ft, is with the manufacturing sector.
The food processing, auto, chemical and pharmaceutical sectors account for 70% of the total warehousing space occupation in the region.
Consumption-based demand, on the other hand, is fuelled by NCR’s large population. With a population of 22 million, NCR is the largest market in India in terms of retail spending, with Delhi, Gurgaon and Noida contributing the most. The changing rules of the retail industry and the advent of e-tail have further necessitated the need for huge warehouses close to the urban centres in order to distribute and deliver in the shortest possible time.
Backed by favourable government policies, such as the 100% FDI in e-commerce and food storage facilities and the declaration of some zones as tax-free, the demand for the warehousing sector in India is set to grow and place the National Capital Region of Delhi as an important warehousing hub.
INDIA'S DEDICATED FREIGHT CORRIDORS