Specialisation Project

On

“Study of Warehousing in India”

Submitted in partial fulfillment for the award of the degree of

Master of Management Studies (MMS)

Submitted by

SOURABH RAORANE

(ROLL NO. 20221049)

Under The Guidance of

PROF. ZUBIN

2022-24

Project Report Submitted in partial Completion of

Master of Management Studies (MMS) to

DURGADEVI SARAF INSTITUTE OF MANAGEMENT STUDIES

MALAD, MUMBAI- 400064

1
 STUDENT’S DECLARATION

I, Sourabh Raorane, student of “Durgadevi Saraf Institute of Management Studies”, Mumbai,

hereby declare that the project entitled “Study of Warehousing in India” the record of an
authentic work carried out by me during the Academic Year 2022- 24 and the information
provided in this study is authentic to the best of my knowledge. This report has not been
submitted to any other university or institute towards an attempt has been made by me to provide
all relevant and important details regarding the topic to support the theoretical edifice with
concrete project report evidence.

Name: Sourabh Raorane

Roll No: 20221049 (Signature of Student)

2
 FACULTY-MENTOR CERTIFICATE

This is to certify that Sourabh Raorane has completed the Capstone Project entitled “Study of
Warehousing in India” during 2022-24 under my guidance. To the best of my knowledge the Report
submitted by him is original, no part of the report has been submitted for award of any other
degree fellowship or other similar titles or prizes.

Name: Prof. Zubin

Date: (Signature of guide)

3
 ACKNOWLEDGEMENT

No one ever achieves a success without the help and friendly guidance and co-operation of so
many people involved in the work. I feel great pleasure in submitting this project report, for this,
I would like to convey few words of thanks to all of them who had made valuable contribution
and guided me in achieving my objectives.

As a part of practical study, industrial training, and research projects are necessary for each
student. It provides necessary exposure towards industry, which is equally important as practical
knowledge in brightening of one’s career.

I express my deepest sense of gratitude to many persons who have been helping in making this
project successful. I would like to express my gratitude to my project guide Prof. Zubin for
providing his valuable advice and constant support during my project work on “Study of
Warehousing in India”. It was indeed a commendable task on his part in spite of the time
constraints and other commitments that he was involved in. Without his help, support and
guidance completing this project would have been impossible.

Also, last but not least I would like to thank all my faculties, DSIMS, Mumbai who have always
helped the students achieve the best through their words of encouragement and by being very
supportive.

Finally, I would be grateful to all readers of the project.

Date: SOURABH RAORANE

4
 TABLE OF CONTENTS

1. EXECUTIVE SUMMARY.................................................................................6
2. INTRODUCTION...............................................................................................8
2.1 Importance of Warehousing..........................................................................9
2.2 Types of Warehouses..................................................................................10
3. Warehousing in India........................................................................................12
3.1 Key Industry Drivers...................................................................................13
3.2 Investment Trends.......................................................................................14
4. LITERATURE REVIEW..................................................................................15
5. SCOPE AND OBJECTIVES............................................................................17
5.1 Objectives...................................................................................................17
5.2 Scope...........................................................................................................17
6. RESEARCH METHODOLOGY......................................................................18
7. DATA ANALYSIS...........................................................................................19
8. FINDINGS AND CONCLUSION....................................................................26
8.1 Findings.......................................................................................................26
8.2 Conclusion..................................................................................................26
9. BIBLIOGRAPHY.............................................................................................27

1. EXECUTIVE SUMMARY

5
A warehouse is an essential component of company infrastructure and a key facilitator in the
global supply chain. The Indian warehousing industry is expected to reach US$ 34.99 billion
(Rs. 2,872.10 billion) between 2022 and 2027, growing at a CAGR of 15.64%. Modern storage
facilities and technological solutions have transformed India's warehousing business in recent
years. With rising demand and supply throughout the years, the Indian warehousing business is
gaining traction. The main participants are third-party logistics (third-party logistics) and e-
commerce companies, which are expanding into tier 2 and 3 cities and eventually increasing
their share in secondary markets.

The main objectives of this study are to assess the current state and future growth potential of the
Indian warehousing sector, comparing and evaluating the performance of the primary markets of
the warehousing sector in India, to identify key trends and challenges in the Indian warehousing
industry.

The research done is qualitative in nature and the data related to the project has been collected
and explained in the detailed manner. While making the project primary data is not collected.
But secondary data is collected to achieve the objectives of the study. The data for the same has
been collected from websites and various articles.

Data Analysis:

 74% of warehousing investments since 2011 have gone towards greenfield / new
development projects, with the remaining 17% are made in ready assets. Only 9% of the
inflows were utilized to buy finished projects.
 Warehousing market demand has sustained record highs of the previous year in FY 2023
compared to the office and residential markets which are yet to approach similar highs
since the pandemic. 4.8 mn sq m (51.3 mn sq ft) of warehousing space were transacted
during FY 2023, marginally higher by 0.1% YoY.
 3PL sector accounted for the highest market share among all occupier groups at 39% in
FY 2023, the highest by any sector since FY 2017. 25% of the total space taken up by the
3PL sector in FY 2023 was located in Mumbai followed by the NCR at 23%.

6
Conclusion:

With the new advent in the warehouse sector, there can be seen a boost the segment. The
primary markets are competing fiercely and major cities like NCR, Mumbai are ahead in
terms of total transaction volumes. Warehousing sector needs to take into account new
changes taking place in the sector and channelize the investments in order to create good
warehouse facilities thus fulfilling the customer needs. Also secondary markets are evolving
along with the primary markets and investments should be done in these markets to promote
their growth. In coming along with new trends, warehousing sector may face various
challenges and they should be prepared for these challenges.

7
 2. INTRODUCTION

The process of keeping tangible inventory in preparation for sale or distribution is known as
warehousing. Businesses of all stripes that need to temporarily keep goods in large quantities
before sending them to other sites or to end users individually utilize warehouses.
For example, a lot of e-commerce companies buy goods in bulk from their suppliers, who then
deliver them to their warehouse for storage. The company, or its third-party fulfillment partner,
then selects and packs the goods from the warehouse and ships it straight to the customer when
an end user puts an order on the e-commerce site. E-commerce has propelled the warehousing
sector's explosive expansion. As a result of significant supply-side investments made by
companies worldwide, the market has actually doubled over the past ten years. [1]
Elements of Warehousing:
While warehousing may seem simple since it mainly involves leaving products in storage, there
are several processes involved to ensure it’s done efficiently and inventory can be moved in and
out quickly, including:
 Capacity planning: Space is the primary resource. As a result, when a shipment of items
is due, workers must arrange where the products will be housed in order to maximize
space utilization.
 Receiving inbound shipments: When products arrive at the warehouse, staff will need to
receive the items and carefully move them to a staging area for processing.
 Tracking inventory: As things enter and exit the warehouse, they must be registered in
the warehouse inventory management system so that administrators may track current
inventory levels and prepare for future adjustments.
 Storing products: After products have been received and processed, they need to be
stored. This can involve putting the products in bins and pallets and then using moving
equipment to transport them to their appropriate storage space.
 Controlling climate: Depending on the nature of the goods, variables like as temperature,
humidity, and pressure may need to be maintained constant. For example, frozen
commodities must be kept in temperatures below freezing. These standards will influence
how and where items are stored in the facilities to maintain optimal quality.

8
 Reorganizing: As new items arrive, current inventory may need to be shifted to ensure
that the entire area is used efficiently. Any changes must be monitored and updated in the
inventory management systems.
 Retrieving and outbound shipping: Finally, when items need to leave the warehouse for
shipping, workers must retrieve, process, package, load, and finally release them from
inventory to make room for fresh inbound products. [1]

2.1 Importance of Warehousing

 Optimal product safety: Depending on the business's products and commodities, adequate
storage solutions are required to preserve product quality and extend shelf life.
Warehousing facilities provide temperature-controlled settings suitable for any type of
goods, therefore preventing rotting or quality changes. Some facilities will provide
refrigerators, freezers, and other storage options that enterprises may use. Warehouses are
also insured, increasing the odds of receiving reimbursement in the event of damaged or
missing merchandise.
 Efficient Order Fulfillment Process: Warehousing provides companies with a centralized
location to stores manage and distribute their goods to their end customers. This reduces
the complexities involved in inventory monitoring and management and cuts down
staffing needs and operation costs.
Warehouses provide businesses with clarity on their workflows and processes. Because
they are able to monitor their operations, from their inventory to delivery, they can easily
spot inconsistencies or bottlenecks and resolve them swiftly.
 Faster Shipping: Most warehouses are equipped with the materials and equipment needed
to quickly process orders, from packing to shipping. These include loading docks, pallet
racks or other conventional packing materials.
As a result, they can eliminate downtime and achieve faster turnarounds, satisfying the
consumer demand for expedited shipping. This plays into increased customer satisfaction,
increasing the likelihood of winning repeat customers.
 Better Customer Service: Customers prefer internet purchasing over traditional brick-
and-mortar establishments due of its ease. At the same time, they want their orders as
soon as possible, exactly as if they had purchased them in person. Businesses under a lot

9
 of pressure to deliver cheaper and faster shipping in order to meet customer demand and
boost satisfaction.
Warehousing helps firms stay competitive by improving the customer experience.
Businesses can use the facility's services to enable faster and cheaper shipping, while
minimizing damage or mistakes during order fulfillment.[2]

2.2 Types of Warehouses

1) Distribution Centre: Distribution centers are warehouses that have larger space than any
other warehouse. These centers enable faster movement of large quantities of goods
within a short time. Goods are procured from multiple suppliers and are quickly
transferred to various customers.[3]
These centers make an important part of the supply chain, as they provide fast and
reliable movement of goods. Most of these centres have computerized control leading to
higher efficiency. To further increase efficiency and lower delivery time, these centres
are often located close to transportation centres.[3]
2) Public Warehouse: A public warehouse is one that is owned by the government and made
available to private sector firms. These warehouses can be rented out for commercial or
personal purposes. Public warehouses are particularly appealing for business owners that
only need to keep merchandise for a short period of time because other warehouse
solutions may be more expensive. Because of their lower cost compared to private
warehouses, public warehouses are popular among new or developing enterprises, such
as e-commerce companies and startups.[3]
3) Private Warehouse: As the term implies, private warehouses are privately held by huge
retail firms, wholesalers, manufacturers, or distributors. Large online marketplaces often
employ privately held warehouses to store items. These private enterprises buy things in
bulk during the busy season and keep them in a warehouse for the methodical delivery of
orders that will undoubtedly come their way.[3]
Private warehouses also known as proprietary warehousing, requires capital investments
from the owner. As a result, it is best suited for established businesses. Although it
requires initial expenditure, it ultimately proves to be highly cost-effective.[3]

10
4) Bonded Warehouse: A bonded warehouse is one that keeps imported goods until customs
duties are paid for them. Customs clearance may be a lengthy procedure, and bonded
warehouses provide a secure environment for these commodities in the interim.
Government entities offer firms with a bond to rent premises to guarantee that earnings
are not lost after things are delivered. These qualities of bonded warehouses might be
appealing to importers who want short- or long-term storage for commodities that are
often forbidden.[3]
5) Temperature-Controlled Warehouse: As the name goes, these warehouses are used to
store items that need to be kept at a specific temperature, mostly perishables.
Temperature-controlled warehouses can range from humidity-controlled environments
that can store fresh fruits, flowers, etc., to freezers that store frozen foods.[3]
6) Smart Warehouse: When we talk about automation these days, warehouses are not left
much behind. Smart warehouses use artificial intelligence in their storage and fulfillment
process. Everything is automated, starting from packing items to transporting goods to
the end customers. [3]
These warehouses require minimal manual supervision, as they operate using the latest
technologies. Smart warehouses are increasingly being used by eCommerce giants like
Amazon and Alibaba. [3]

11
 3. Warehousing in India
A warehouse is an essential component of company infrastructure and a key facilitator in the
global supply chain. The Indian warehousing industry is expected to reach US$ 34.99 billion
(Rs. 2,872.10 billion) between 2022 and 2027, growing at a CAGR of 15.64%. Modern storage
facilities and technological solutions have transformed India's warehousing business in recent
years. With rising demand and supply throughout the years, the Indian warehousing business is
gaining traction. The main participants are third-party logistics (third-party logistics) and e-
commerce companies, which are expanding into tier 2 and 3 cities and eventually increasing
their share in secondary markets. Businesses are transitioning to a hub-and-spoke model while
also implementing technology to simplify operations, with an eye on the larger picture of ease,
efficiency, and sustainability.[4]

Grade A warehouses are modernized structures designed specifically to fulfil the demands of
warehouse logistics. They offer cutting-edge technology, high-quality building materials, a
prominent location, and a convenient traffic interchange. Grade B items are antiquated structures
that must be renovated to meet current warehouse logistics requirements.[4]

As depicted in the below chart, India saw a 21% year-over-year increase in the total stock of
Grade A and B warehouse space in the top eight cities in 2021. The total warehousing capacity is
expected to be 287 million square feet by the end of 2021, up from 238 million square feet the
previous year. Grade A stock in India was 134 million square feet, representing a 5-year CAGR
of 29.9%. Among the eight major cities, the three largest cities in the country, including Delhi
NCR, Mumbai, and Bengaluru, contribute more than half of the warehousing stock.[4]

As demonstrated in the below pie chart, 3PL/Logistics has remained the top segment in terms of
warehouse space demand for the last five years. Various e-commerce areas, including retail,
groceries, pharmacy, and food delivery, are likely to grow substantially as consumers shifted
their purchasing habits from offline to online. COVID-19 has increased e-Commerce adoption,

12
increasing demand for online delivery of both essential and non-essential commodities. While
the share of manufacturing demand from the Auto & Ancillaries and Engineering sectors has
declined during the epidemic, demand from other consumption-based sectors such as Retail and
FMCG has increased.[4]

3.1 Key Industry Drivers

 Government initiatives:
The government's warehousing policy focuses on establishing exclusive storage zones
through public-private partnerships in order to cut transportation and logistics costs while
also accelerating growth on fiscal year 2023, the government would invest US$ 91.38
billion (Rs. 7.5 lakh crores) on infrastructure, logistics development, and multimodal
connectivity. Reforms like GST and e-way bills promote industry growth, consolidation,
and efficiency. The establishment of free-trade logistics parks and storage zones.[4]
 New-age startups:
The advent of new-age tech logistics firms that are actively entering the market and
generating competitive products. Several new enterprises are joining the B2B sector,
mostly driven by manufacturing. New players are implementing new technology and
digital systems to increase efficiency, resulting in industry development.[4]
 Technology advancement:
Modern technology-based solutions create opportunities for solution extension across the
whole value chain. Warehouses are being developed and integrated with technologies like
IoT, robots, and artificial intelligence (AI). [4]
 Flourishing e-commerce:
As e-commerce grows, operations must expand to accommodate greater demand.
Consumer behavior is evolving, and they expect convenience from last-mile connections,
easy returns, and other value-added services. The growth of direct-to-consumer (D2C)

13
 brands needs end-to-end logistical services. Omni-channel commerce necessitates the
operation of many warehouses to service end customers. [4]

3.2 Investment Trends

Warehouse investment accounted for the second greatest percentage of institutional real estate
investment in both 2021 and 2022, accounting for 27% and 31%, respectively, outperforming
other asset classes such as residential and retail. During the four-year period 2019-2022, the
western area of the country - led by Mumbai, Pune, and Becharji, (a tiny town in Gujarat) -
witnessed the second-greatest institutional investment in warehousing, accounting for 35% of
total investment in the industry, demonstrating the increased confidence that investors have in
the nation's Tier II cities. [4]

14
 4. LITERATURE REVIEW

1) Study on the development of Industrial Warehousing in India: A paper from International

Journal of Production Technology and Management (IJPTM), Dr. J. Rengamani, V.
Venkatraman, Volume 6, Issue 1, January-December 2015.

The Indian logistics market has evolved from traditional transport companies to a full-
fledged logistics service provider, which offers various supply chain services such as
transportation, warehousing and other value additions. Traditionally, there existed only
pure transport or warehousing service providers of the in-house nature. The trend
changed towards providing customized services and started being outsourced to
specialized players in the industry. Thus emerged the concept of third-party logistics
(3PL), where companies provide outsourced or third-party logistics services to companies
for part, or sometimes all of their supply chain management functions. The objectives of
this paper are to know the key challenges for warehousing in India, know the warehouse
connectivity through multimodal transport in India and to know the opportunities for
warehousing in India.

2) Performance Assessment of the Storage and Warehousing Industry in India: The Journal
of Industrial Statistics, Robin Singhal, Shalini Saksena, Volume 6, Issue 1,

This study is an attempt to analyze the performance of the storage and warehousing
(S&W) Industry in India using the Annual Survey of Industries (ASI) unit level data for
the years 2005-06 and 2009-10. It aims to bridge the gap in the current policy discourse
regarding the development of this critical infrastructural sector by focusing on the supply
side analysis, with special emphasis on the refrigerated S&W in the backdrop of (a) it
being the dominant sub-sector in the S&W industry and (b) the lopsided state level
infrastructural gap assessed by the National Centre for Cold-chain Development
constituting the demand-side analysis. The performance of the sector and its sub-sectors–
non-refrigerated S&W and refrigerated S&W, are assessed in terms of critical financial
and economic ratios.

15
3) Research and Markets: India Logistics and Warehousing Industry Outlook to 2019 -
Driven by E-commerce Logistics and Make in India initiative:

The report covers various aspects such as market size, value chain, business model of
Logistics and Warehousing industry and segmentation on the basis of modal mix and
services mix, organized and unorganized, domestic and international flow corridors. The
publication also provides a detailed competitive landscape as well as the market share
analysis in each segment along with future opportunities and expected catalysts for the
market. The report will help industry consultants, potential entrants, logistics and
warehousing companies, 3PL vendors and other stakeholders to align their market centric
strategies according to ongoing and expected trends in the future.

4) Review of Warehouse Management System: International Journal of Advanced Research

in Science, Communication and Technology (IJARSCT)
Shreyas Gawande, Ruchita Agrawal, Rutuja Ingole, Prathamesh Akotkar, A. K. Shahade,
Volume 3, Issue 8, April 2023.

In warehouse management, modern companies and distribution center are overflowing

with information about the transportation and storage of goods and services. Warehouse
Management systems (WMS) are often used and fulfil these goals. Current work
examines the program as a useful tool for finding and using a WMS. In addition, a
research methodology is provided to guide upcoming research on WMS and logistics
information (LIS) in general. Meanwhile, inventory management is, in general, the study
of determining the structure and location of items in stock.

16
 5. SCOPE AND OBJECTIVES

5.1 Objectives

 To assess the current state and future growth potential of the Indian warehousing sector.
 To compare and evaluate the performance of the primary markets of the warehousing
sector in India.
 To identify key trends and challenges in the Indian warehousing industry.

5.2 Scope

 Study is limited to India only.

 Study is limited for the eight cities which are considered the primary markets. The eight
cities are Hyderabad, NCR, Mumbai, Bengaluru, Chennai, Kolkata, Pune, Ahmedabad.

17
 6. RESEARCH METHODOLOGY

Research Design

The research is Qualitative in nature and the data related to the project has been collected and
explained in the detailed manner.

Type of Research

I followed exploratory method of research for m project. Exploratory research is research

conducted for a problem that has not been studied more clearly, intended to establish priorities,
develop operational definitions and improve the final research design.

Data Collection

 Primary data has not been collected for this project.

 Secondary data is collected for this project and it is used to achieve the objectives of the
study.
 The data for the same has been collected from websites and various articles.

18
 7. DATA ANALYSIS

Annual Demand Analysis and Sector Split

The warehousing market in India has long been considered an attractive investment opportunity,
given the growing needs of a massive consumption market and the aggressive economic growth
targets of the government. The focus on increasing manufacturing sector’s share of GDP to 25%
by 2025 and transforming India into a global design and manufacturing hub via the ‘Make in
India’ initiative is also a major driving force behind the interest in the warehousing market.
While the investment rationale holds tremendous promise, the fledgeling warehousing market
has seen demand falter in recent years due to economic sluggishness since FY 2020 and the
COVID-19 pandemic in FY 2021.

However, vast improvement in the vaccination rates and an increased understanding of the
pandemic laid the foundation for a better-than expected recovery in the general business
environment. With people coming to terms with their fear of the pandemic in FY 2022, supply
chains recovered and demand rebounded quickly leading to a lot of spill over demand coming
back into the market. The substantial increase in construction costs due to inflationary forces
pushing up the prices of critical inputs such as steel and cement, also did not hold back the
market from bouncing back to record levels in FY 2022.

19
 .

In comparison to office and retail assets, warehousing assets take less time to build (12 to 18
months). Because India's warehousing sector is so fragmented, there are limited, wellorganized
enterprises operating across the country, and acquisition expenses can have a major impact on
investors' fund sizes. As a result, investors choose to create assets that are eventually worthy of
REITs or secondary sale. As a result, 74% of warehousing investments since 2011 have gone
towards greenfield / new development projects, with the remaining 17% are made in ready
assets. Only 9% of the inflows were utilized to buy finished projects.

20
Warehousing market demand has sustained record highs of the previous year in FY 2023
compared to the office and residential markets which are yet to approach similar highs since the
pandemic. 4.8 mn sq m (51.3 mn sq ft) of warehousing space were transacted during FY 2023,
marginally higher by 0.1% YoY. NCR and Mumbai led the market in terms of overall
transaction volumes during FY 2023. Mumbai, Bangalore and Kolkata also scaled historic
annual highs during the year.

21
Average Rents:

Market FY 2022 FY 2023 YoY Change

INR/sq m/month INR/sq m/month
(INR/sq ft/month) (INR/sq ft/month)
Bangalore 215(20) 231(21.5) 8%
NCR 203(18.9) 217(20.2) 7%
Ahmedabad 174(16.2) 183(17) 5%
Mumbai 238(22.1) 249(23.1) 4%
Kolkata 238(22.1) 249(23.1) 5%
Pune 258(24) 269(25) 4%
Chennai 236(21.9) 242(22.5) 3%
Hyderabad 215(20) 215(20) 0%

Rent growth has been the bane of the market over the past decade with developers facing stiff
resistance from occupiers who were extremely reluctant to cede any ground on this aspect.
Inflationary trends in steel and cement caused by a supply crunch due to the pandemic and the
more recent rate hikes left little choice for developers and operators but to increase rates over the
past two years. This coincided with the strong demand seen during the period and maintained the
market balance in favour of the developer, pushing up rents across seven of the eight primary
markets in the range of 3-8% YoY during FY 2023.

Sector-wise share of transactions:

Sector FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

3PL 15% 35% 36% 35% 31% 29% 39%
Other Sectors 30% 21% 21% 23% 23% 28% 30%
Retail 10% 12% 11% 8% 4% 11% 13%
E-commerce 18% 14% 24% 23% 31% 23% 7%
Miscellaneous 4% 4% 1% 3% 1% 4% 5%
FMCD 14% 6% 3% 4% 5% 3% 4%
FMCG 10% 7% 4% 4% 5% 2% 3%

22
3PL sector accounted for the highest market share among all occupier groups at 39% in FY
2023, the highest by any sector since FY 2017. 25% of the total space taken up by the 3PL sector
in FY 2023 was located in Mumbai followed by the NCR at 23%.

Retail sector's share spiked from 4% in FY 2021 to 11% in FY 2022 as retailers had to quickly
add warehousing capacities to cater to the swift rise in demand. This increase in demand has
sustained in FY 2023 with retail sector occupiers taking up 13% of the total space transacted,
attaining a new high for the sector. 13% of the volume transacted during FY 2023 was purely for
industrial use i.e. their end-use involved some form of manufacturing activity from sectors like
automobile, FMCG and FMCD. Among the top eight markets in India - Pune, Chennai and
Ahmedabad are cities with a significant industrial base.

Share of Grade A Stock:

Market FY 2022 FY 2023

Chennai 77% 75%
Pune 70% 73%
Kolkata 59% 48%
Hyderabad 54% 46%
Bengaluru 40% 45%
NCR 36% 40%
Ahmedabad 32% 35%
Mumbai 17% 20%
Total 38% 40%

The development of Grade A warehousing facilities has continued to increase in recent years,
and currently constitutes 40% of the total stock compared to 38% in FY 2022. The larger
warehousing markets of Mumbai and NCR have a significantly lower proportion of Grade A
warehouses as they are much older markets, and a bulk of their stock had been built before the
demand for Grade A warehousing gathered momentum. Pune and Chennai have the
highesconcentration of Grade A stock due to their primary demand base of auto and auto
ancillary occupiers.

23
Key Trends and Challenges :

Trends:

Increase in investments:

Warehousing stood out as a lucrative investment asset for global companies, attracting
substantial interest and investments. A Knight Frank report indicates that approximately 77% of
private equity (PE) players express positive sentiments about continued participation in creating
new warehousing assets in India.

Grade-A warehouses on the rise:

Currently constituting 40% of the total stock, grade-A warehousing reflects a transformative
shift, driven by diverse industry needs and technological advancements. Businesses are
increasingly seeking warehouses with inherent operational efficiencies and better contingency
planning. Subsequently, vertical and horizontal warehouses have also gained momentum. Pune,
Chennai, and Ahmedabad stand out with the highest concentration of grade-A stock, primarily
due to their demand base around auto and auto ancillary occupiers.

Expansion in Tier-2, Tier-3 markets

The rise of warehouses in Tier-2 and Tier-3 markets has emerged as a pivotal trend in 2023,
reshaping the geographical landscape of the warehousing industry. Traditionally concentrated in
metropolitan areas, warehouses are now strategically expanding into secondary markets such as
Hosur, Vijayawada, Cuttack, Guwahati, Coimbatore, among others because of their lower land
acquisition costs, availability of skilled labor and improved connectivity to the end-user.

Automation & digitization transforming warehouses

The use of automation in Indian warehouses is experiencing a gradual upswing. However, a

substantial acceleration is anticipated in the coming years. According to a report by Alvarez &
Marsal, over 80% of Indian warehouses will integrate some level of automation by 2030. Grade-
A warehouses equipped with modern technologies are essential amid rising demand. [5]

24
Key Challenges:

Infrastructure and space constraints:

Many warehouses in India are constrained by limited space and outdated infrastructure, making
it challenging to implement advanced technologies and accommodate growing inventory.

Skilled labor shortage:

Finding and retaining skilled labor for warehouse operations can be a challenge, especially with
the increasing demand for specialized skills related to automation and technology.

Regulatory Complexity:

The regulatory landscape in India can be complex, with various state and central regulations
affecting warehouse operations. Navigating this complexity requires careful planning and
compliance efforts.

Rising Operational Costs:

As warehouses invest in automation and sustainability initiatives, operational costs may initially
rise. Balancing these investments with cost –effectiveness can be a delicate task. [6]

25
 8. FINDINGS AND CONCLUSION

8.1 Findings

 4.8 mn sq m (51.3 mn sq ft) of warehousing space were transacted during FY 2023,

marginally higher by 0.1% YoY.
 NCR and Mumbai led the market in terms of overall transaction volumes during FY
2023. Mumbai, Bangalore and Kolkata also scaled historic annual highs during the year.
 Trends in steel and cement caused by a supply crunch due to the pandemic and the more
recent rate hikes left little choice for developers and operators but to increase warehouse
rent rates over the past two years.
 3PL sector accounted for the highest market share among all occupier groups at 39% in
FY 2023, the highest by any sector since FY 2017.
 The development of Grade A warehousing facilities has continued to increase in recent
years, and currently constitutes 40% of the total stock compared to 38% in FY 2022.

8.2 Conclusion

With the new advent in the warehouse sector, there can be seen a boost the segment. The primary
markets are competing fiercely and major cities like NCR, Mumbai are ahead in terms of total
transaction volumes. Warehousing sector needs to take into account new changes taking place in
the sector and channelize the investments in order to create good warehouse facilities thus
fulfilling the customer needs. Also secondary markets are evolving along with the primary
markets and investments should be done in these markets to promote their growth. In coming
along with new trends, warehousing sector may face various challenges and they should be
prepared for these challenges.

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 9. BIBLIOGRAPHY

1) https://business.adobe.com/blog/basics/what-warehousing-guide-
logistics#:~:text=Warehousing%20is%20the%20process%20of,or%20individually%20to
%20end%20consumers.
2) https://worldwidelogisticsltd.com/importance-of-warehousing/
3) https://www.shiprocket.in/blog/different-types-of-warehouses
4) https://www.ibef.org/blogs/warehousing-and-logistics-sector-in-india
5) https://www.itln.in/blogs/all/a-look-back-warehousing-trends-that-defined-2023-
1350796?infinitescroll=1
6) https://www.foodinfotech.com/evolving-trends-in-warehouse-management-in-india-in-
2023/#:~:text=One%20of%20the%20most%20notable,solutions%20to%20streamline
%20their%20operations.

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