Demand for warehousing and logistics parks will gain further momentum
The year 2023 will observe implementation of India's National Logistics Policy in letter and spirit to elevate cost efficiencies, timely delivery, forward integration of a centralized operating system, and create a single-window e-logistics market. As India is poised to become a global manufacturing centre due to geo-political discord, the global giants are betting big on Indian soil. The higher interest to set up their manufacturing base and expand commercial real estate presence will earmark an era of upbeat growth in this sector. This expansion will drive employment and investment opportunities into the logistics sector, giving impetus to the nation's overall economic growth.
- HEMANT PRABHU
COO, Greenbase Industrial and Logistics Parks
How do you look at the year 2023?
The year 2023 will observe implementation of India's National Logistics Policy in letter and spirit to elevate cost efficiencies, timely delivery, forward integration of a centralized operating system, and create a single-window e-logistics market.
As India is poised to become a global manufacturing centre due to geo-political discord, the global giants are betting big on Indian soil. The higher interest to set up their manufacturing base and expand commercial real estate presence will earmark an era of upbeat growth in this sector. This expansion will drive employment and investment opportunities into the logistics sector, giving impetus to the nation's overall economic growth.
The National Infrastructure Pipeline (NIP), envisioned by our PM under the Gati Shakti Plan with an estimated investment of around Rs. one lakh crore is gearing up with a host of mega-infrastructure projects to completely transform the supply chain landscape. Freight and multimodal corridors will pave the way to create a multitude of new economic zones and establish better accessible geographies.
The diversification of established real estate players into the logistics and warehousing sector is a natural move based on their expertise of land, building and regulatory liasoning. This will lead to the entry of multiple branded players catering to the huge demand for Grade A assets. Earlier, majorly driven by E-commerce, the logistics sector is now also propelled by the growth in FMCG, retail, automobile, heavy engineering, renewable energy, 3PL and pharma industries. The emergence of tier-II and tier-III cities as potential logistics markets is on the back of the rising last-mile delivery trend. Demand for build-to-suit space is growing as it enables the freedom of choosing one's location, size, and area.
The sectors demand to grant 'infrastructure' status in the Union Budget 2023 to avail long term cheap credit funding and be global competitive. The industry also yearns for better incentivization like labour law relaxation, power at concessional rates, concession in stamp duty and registration fees in land acquisition, and capacity-building incentives.
The Indian logistics sector contributes nearly 14% towards the nation's GDP growth and aims to achieve $380 billion by the year 2025. India's future looks promising with infrastructure, warehousing, and manufacturing all three geared for robust development in tandem to build an Atmanirbhar Bharat.
What could be the key challenges and what will drive the growth?
With the present world overview, the upcoming quarters might witness inflationary pressure looming across the logistics sector. Fragile supply chain, high crude oil price and raw material costs, shortage of skilled labour, sluggish statutory approvals clubbed with global market volatilities as the major challenges.
Demand for warehousing and logistics parks will gain further momentum owing to growing consumer demand, and government incentivization. Greenfield assets are preferred over brownfield assets, pertaining to higher returns from the former. Cold storage warehousing is on the rise due to the growth of organized food retailers, improved agriculture supply and a healthy need to store biopharma and nutraceutical products. The 'just-in-time' model has gained a strong foothold with faster turnaround of deliveries expected by instant age consumers.
On the brighter side, the growth impetus also falls on factors like higher consumption appetite steering even higher demand for goods & services across the world. An open economy has offered businesses the chance to leverage the power of digitalization and set their footprints across the globe to reach the right target audience. The world has never witnessed tech start-ups and the e-commerce industry flourish at such an unprecedented rate ever before and it is yet to reach even newer pinnacles. Hence, logistics is a promising sector to look forward to in the coming year and witness transformational changes taking place.
How are you geared up for the year ahead?
Greenbase Industrial and Logistics Parks, a Hiranandani subsidiary is in joint venture with Blackstone. The real estate group's natural expertise in land acquisition, regulatory approvals, and development will prove beneficial for the expansion of the Warehousing platform. Today, we have active industrial parks in Chennai, Pune, Panvel, Nashik, and Durgapur with a total development potential of approx. 15 million sq ft and we are looking to expand our capacity to 30 million sq ft in the next five years with additional land banks adding to our portfolio. In addition, we are keen to develop inroads towards in-city warehousing where the next gravity of center lies. All our operation cycles are built on the foundations of sustainability with special emphasis on recycling, and reusing resources to their optimum potential.
The year 2023 will be a year of 'implementation', waiting for the logistics sector to play a proactive role in economic growth. A robust supply chain network powered by strategic relations with key global economies will bring India to the forefront of the leading world logistics ecosystem and meet the demand of the current market dynamics.
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