Think beyond four walls
The modern and scientific warehousing industry in India has yet to take off. Presently, the sector is utterly unorganised. India has a total warehousing space of about 1,800 million sqft, of which only 8 per cent (144 million sqft) is in the organised sector. However, recent researches estimate Indian warehousing sector will grow at the rate of 35-40 per cent annually to become approximately US$ 60 billion industry by 2012. Currently, warehousing activities account for about 20 per cent of the total Indian logistics industry. Latest trends show that there is a huge potential for a large amount of quality warehousing space. Rapid growth of organised retail and increasing manufacturing activities in India are the key demand generators for warehousing space in India. In addition, e-Commerce option is also driving the warehousing demand. Further, the rise of domestic consumption and international trade is providing huge impetus to the growth in warehousing market. Significantly, containerised cargo traffic which leads to the growth in CFSs and ICDs adds on to the growth in warehousing sector. On the flip side, there are plenty of challenges. Inadequate physical infrastructure, lack of land availability, highly unorganised and fragmented market, lack of standardisation, complex tax regime, lack of power supply and increasing cost, and high costs in warehousing would be a major area of concern for prospective investors. Moreover, operational challenges such as supply chain inefficiency, lack of skilled manpower, inefficient material handling and lack of IT penetration need to be resolved by warehousing operators to cater to the future demand. An effective National Policy on Handling, Storage and Transportation, early shift to GST tax regime, Warehousing Act, encouragement of private investment in logistics parks and FTWZs by offering tax benefits, infrastructural developments and fast development of the Dedicated Freight Corridor would also be the desired initiatives from government to bring the warehousing/logistics industry beyond the four walls.