Booming Demand for Warehouses in India

Syllabus: GS3/ Economy

Context

  • Warehousing, once perceived as a mere storage function, has now emerged as a crucial pillar of India’s supply chain infrastructure.

Factors Driving the Demand for Warehousing in India

  • E-commerce Boom: India’s e-commerce sector is projected to reach $350 billion by 2030.
    • The need for fast and efficient deliveries requires expansive warehousing networks close to consumption hubs.
  • Growth of Cold Chain Logistics: Rising demand for fresh food, pharmaceuticals, and vaccines has led to increased investment in temperature-controlled warehousing.
  • Initiatives like ‘Make in India’ and Production-Linked Incentive (PLI) schemes boost the demand for warehousing to store raw materials and finished goods.
  • By 2026, India is projected to be among the top 6 users of warehouse automation systems worldwide, with the market expected to reach USD 2 billion annually.
  • Third-Party Logistics (3PL) Services: The rise of 3PL providers is increasing demand for Grade A warehouses with higher efficiency and better technology integration.
warehouse leasing volume
sustain warehousing parameters

Challenges in warehousing development

  • High Land Acquisition Costs: Limited availability of affordable land in key logistics corridors affects expansion.
  • Policy Constraints: Complex land use regulations and inconsistent state policies hinder smooth development.
  • Infrastructure Gaps: Inadequate road connectivity and power supply in certain regions slow down warehouse efficiency.
  • Skill Shortages: The demand for skilled labor in warehouse management and logistics is increasing, necessitating workforce training.

Government steps

  • National Logistics Policy (NLP) aims to reduce logistics costs to 10% of GDP, thereby improving cost efficiency.
  • PM Gati Shakti Programme: It focuses on integrated infrastructure planning and multimodal connectivity.
  • Development of Multimodal Logistics Parks (MMLPs): It improves logistics efficiency, reduces costs, and facilitates seamless movement of goods across various transportation modes (rail, road, air, and sea).

Way Forward

  • Smart Warehouses: Adoption of AI, IoT, and robotics is enhancing warehouse efficiency, inventory tracking, and order processing.
  • Regulatory Reforms: Streamlining state-wise policies to ensure uniformity in warehouse development.
  • Sustainable Warehousing Practices: Promoting green warehousing with energy-efficient storage systems and renewable energy integration.

Source: BL

 

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