News / India on the cusp of a warehousing boom as sourcing diversifies

Photo: Panattoni

Global investors are increasingly targeting Indian logistics verticals as the emerging economy lifts its growth profile and competes to be a major sourcing hub in Asia.

The latest investment comes from US-based industrial and logistics real estate developer Panattoni, which will develop around seven hectares in the national capital region (NCR) of Delhi, the first in a $200m investment programme for India it announced last year.

Panattoni estimates phase 1 of the Panattoni Park NH71 plan will require some $13.5m for developing a 360,000 sq ft space, with work targeted to begin in Q1 next year and be complete a year later.

“Panattoni views India as a critical node for its global business and plans to rapidly expand in the country in the coming years,” said its India MD, Sandeep Chanda.

He said the firm was also making efforts to identify and acquire more land in major locations for a planned network expansion.

Founded in 1986, Panattoni claims to have developed more than 610 million sq ft of warehousing space across some 310 cities globally.

India’s warehousing sector has seen robust growth in recent years, with anecdotal industry reports forecasting a CAGR of about 16% and a market size of $35bn by 2027.

To boost investor confidence, New Delhi accorded “infrastructure status” to the logistics sector, thus creating a liberalised regulatory framework for funding flows. It followed July 2017’s roll-out of a single, unified indirect tax regime – the Goods and Services Tax (GST), eliminating multiple taxes on supply chains at local government level.

Amar More, CEO of Mumbai-based Kale Logistics Solutions, told The Loadstar there had been a warehouse capacity boom in India, with a 24% demand rise seen last year, adding: “The drivers are manufacturing, retail and e-commerce.

“This is further accentuated by secondary markets in tier-2 cities building the right infrastructure, by way of road networks, air connectivity and rail systems, which are improving last-mile delivery.”

Amid the trade growth, major container shipping groups have extended their reach beyond port-to-port services to warehousing and logistics network development in India as they pursue end-to-end supply chain strategies.

Last month, CMA CGM-owned Ceva Logistics concluded a deal to acquire Mumbai-based contract logistics provider Stellar Value Chain Solutions, placing it on a stronger footing in India as demand for 3PL and warehousing services increases.

Indian logistics heavyweights are also expanding their presence in the warehousing arena. Allcargo Group recently added a large, multi-user chemical complex on the outskirts of Mumbai, at Uran.

“This is in line with our commitment to delivering world-class logistics solutions, supporting the Indian government’s initiative to position India as a global manufacturing hub,” said Allcargo, which also owns global cargo consolidator ECU Worldwide.

Global real estate services firm CBRE said the significant capacity expansion in India’s industrial and logistics (I&L) markets was led by 3PL leasing activity across the spectrum.

Ram Chandnani, MD of advisory and transactions services at CBRE India, added: “The accelerated embrace of ‘multipolar’ supply chain strategies, complemented by the government’s pro-investment initiatives, continues to propel the 3PL and engineering and manufacturing sectors.

“We also anticipate a surge of interest from FMCG, retail, and electronics and electrical sectors, driven by consumer demand,” he added.

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