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Global investors are bullish on creating large portfolios in the Indian logistics and warehousing sector

Global investors are bullish on creating large portfolios in the Indian logistics and warehousing sector, says Akshay Hegde, Co-founder & MD, ShakeDeal

What are the major trends that are looking to shape the Logistics & Warehousing industry in the country?
Warehousing is an integral part of the booming logistics and supply chainindustry and is expected to be worth 215 billion dollars by 2020.Logistics, retail, e-commerce, omni-channel commerce and ancillary industries have propelled the expansion of the warehousing industry at an unprecedented rate. Warehousing operations have evolved over the years. Today, value added activities such as kitting, packaging, sorting, cross docking and shipping have become part and parcel of warehousing operations. The e-commerce boom has helped the logistics space to attract lucrativeinvestments. The fragmented logistics sector has become the darling ofventure capitalists and private equity firms with a lot of capital being infused into logistics and supply chain companies. There has been a growing demandto leverage technology and innovative solutions to transform the logistics andsupply chain industry. Newer business models such as direct to consumer (D2C) and hyper-local commerce have ushered in massive demand for logistics and warehousing. The investor confidence and optimism on the outlook of the industry is a testimony to this fact.
Has the Logistics sector become the preferred rental class for investors, after commercial office and shopping malls?
On account of the strong boost in demand from e-commerce and logisticscompanies, global investors are bullish on creating large portfolios in theIndian logistics and warehousing sector. Several industrial and warehousing parks are coming up in corridors that are optimal centres’ of gravity for logistics networks. Being located about 50-60 km outside metros, the land is usually available at far lower prices as compared to in urban areas. The willingness of large companies to enter into long term BTS (Built to Suit) leases also makes such investments viable and attractive to investors. This sector will witness more inflow of funds in 2020 and the coming years as investors see this sector as a long-term investment bet.
How does the sector look to shape up in 2020?
The government has accorded infrastructure status to the logistics and supplychain industry. This has opened up the sector to get Foreign DirectInvestment(FDI) funds at lower costs, and the banks would be able to lendmore with less restrictive provisioning requirements. With sovereign wealth funds being made exempt from taxes on income, dividends and capital gains, investments into infrastructure will be given an impetus. Warehouse markets have matured with the consolidation of small local developers and institutionaldevelopers. The Indian warehousing industry is well placed to join the leagueof its global counterparts thanks to greater access to funds and consolidationin this space.
Has the issue of land acquisition been addressed adequately by the government for the sector to attract bigger players?
Land acquisition has been an issue for investors as acquisition processes are cumbersome, and bureaucratic delays make it worse. The Karnatakagovernment is trying to address this by setting a 30-day time limit forbureaucratic clearances. The government has proposed to amend section 109of the Karnataka Land Reforms Act of 1961. The act deals with the purchase of farmland directly by investors. The government should permit private playersto develop industrial estates, allot sites and fix rates. This process will helpinvestors in getting land at competitive prices and opening up the sector to large funds.
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