Government infra initiatives will boost logistics and warehousing

Authored By Rajesh Jaggi, Managing Partner – Real Estate, The Everstone Group The logistics and warehousing sector in India will attract investments of $10 billion over the next five years and warehousing space will double by 2022, according to estimates by JLL. The sector’s expansion is driving growth in national and state incomes, trade flows and foreign direct investment. It has also led to employment generation in both, the organised and unorganised sectors (according to the 2018 Economic Survey, the logistics sector employs about 22 million). The government’s infrastructure development initiatives have boosted logistics sector growth. In the latest Budget presented by Finance Minister Nirmala Sitharaman, there is a commitment of about Rs 100 crore for infrastructure upgradation along with diverse schemes to strengthen networking and connectivity. Under the first phase of the Bharatmala project, 34,800 km of national highways, including 10,000 km of residual National Highways Development Project (NHDP) stretches, have been approved. Sagarmala, the project to harness India’s 7,500-km coastline, 14,500 km of potentially navigable waterways, strategic locations on key international maritime trade routes as well as other infrastructure schemes such as dedicated freight corridors, will be advantageous for the sector. Free-trade warehousing zones and container freight stations are being established for efficient growth of the logistics industry. The sector has evolved over the years — from being a means of transportation or storage of goods to being part of every step, from a product’s point of origin to its point of consumption. This has led to job creation, affordable quality service and an efficient resource utilisation. The government’s aim to integrate fragmented warehousing capacities through a national warehousing grid is a massive step towards modernising the country’s logistics network. The National Warehousing Grid will streamline the industry and transition it from unorganised to organised. This will increase supply-chain efficiency and investments in Grade A warehousing in Tier 2 and 3 markets. The government also plans to establish multi-modal logistics parks. Currently India spends 14% of its GDP on logistics, which is higher than most nations. To bridge the gap and reduce the cost, initiatives such as the ‘infrastructure’ classification for logistics, along with other development schemes, would reduce the proportion of GDP spent on it. Technological developments also play a crucial role in cost-efficiency. With positive demographic features, technological advancements along with strong support from government policies and schemes, the logistics and warehousing sector is making headway. The government’s plan to encourage adoption of artificial intelligence and skilling people in it, the Internet of Things and big data will lead to innovation and implementation of the latest technology in the sector. As the nation grows, demand for goods and commodities will surge. Storage facilities are critical to sustain this. Thus, with infrastructural upgradation and easy transportation facilities, the government has taken a step towards boosting growth for the entire logistics and warehousing sector.