by Abhijit Verma -Executive Director & CEO of Avigna Group
India’s warehousing sector is a critical constituent of the economy. In a span of 12 months, the warehousing landscape has undergone a dramatic transformation. From pre-Covid to now, certain things have irreversibly changed and changed very fast. Covid -19 has accelerated two major trends which have had a significant impact on the warehousing industry;
Aggressive demand in the e-commerce sector and the AtmaNirbhar campaign being put in action with brands looking at production and manufacturing in India and for India. Both of these directly resulted in the rise in demand in the warehousing sector as a result we saw even real estate brands rushing to seize this opportunity, drawing the attention of international investors. Moreover, initiatives such as the establishment of logistic parks and free trade warehouse zones and implementation of GST by the Indian government boosted the country's warehousing market towards growth. Further, the introduction of ‘Make in India’ campaign encouraged entrepreneurs to manufacture their products within India & export outside.
Around 60% of the modern warehousing capacity in India is concentrated in business corridors of the metros such as Bangalore, Chennai, Mumbai, and National Capital Region (NCR), Ahmedabad, and Kolkata. It is not just the e-commerce companies but Fast Moving Consumer Durable (FMCD), Fast Moving Consumer Good (FMCG), Manufacturing and Retail industries are also looking to penetrate deeper into tier II and tier III cities across the country for last mile delivery at minimum cost. This rise of e-commerce has played a huge role in shaping the way warehouses operate today.
The next sector that is going to give a big push to the Indian warehousing industry is Agriculture. It is the backbone of the Indian economy. It employs a working force of more than 60% of the population. It contributes only 18% to the GDP, and 19% to India’s exports despite being one of the major economic sectors. There are several loopholes to be addressed in the agricultural sector, and storage with respect to warehousing is one of the primary concerns. According to the data released by the United Nations Food and Agricultural Organization (FAO), more than 40% of the food produced is wasted at the consumer and retail level. Revamping agricultural warehousing in a revolutionary manner is the need of the hour to have a positive domino effect. The exigency to increase the scientific storage capacity of agricultural products stems from the fact that India has an ever-growing population to cater to, along with the rise in production capacity since the green revolution. Warehousing solutions should now promote end-to-end services (Third Party Logistics) for efficient integration of the forward and backward linkages. Smart agritech solutions in warehousing should be promoted by adopting technological solutions such as AI, Machine Learning, IoT, and Automation. They promote efficiency while boosting functional capacity.
Covid-19 pandemic and lockdown measures have surrounded our future with uncertainties. The effect of the virus is visible in every aspect of life starting from health & hygiene, to several sectors, industries, etc. The logistics industry is fighting hard to mitigate the demand-supply challenges triggered by Covid-19. Every industry, be it big or small, is facing the brunt of the pandemic and is impacting the overall logistic management in the country as well. Some of the key challenges that the sector is facing are shortage of manpower due to the migration of labor, delay in finalizing land parcels in new locations, and official agreements and approvals. However, many sectoral experts feel that the pandemic could actually help the warehousing industry grow many folds in the days to come. With the prevailing fear of coronavirus, consumer behavior has changed. People have started adopting e-commerce transactions over other physical transactions. Driven by strong fundamentals & the robust growth of the e-commerce & manufacturing sector, the demand for warehouses is going to increase across the country especially in the tier 2 tier 3 cities. India has the potential to emerge as a manufacturing hub beating China in the long run. Fundamentals being strong, India needs to capture the lion’s share of manufacturing demand by replanning the global supply chain strategies.
One of the major factors which decide the growth of warehouse & logistics is the available connectivity infrastructure. There are several bottlenecks in our connectivity in many parts of the country which hinders the growth of many industries. Support from the government will play a critical role in expediating the process of setting up warehouses across the country. The farm sector liberalization bill is also expected to bring in huge demands for this sector.
As we step into a new world, it is essential that we cope up to the new normal. Companies laid down many protocols when the pandemic struck last year specifically around solutions that help improve the safety of workers for reducing the chances of spreading the illness. I believe even in the post pandemic era some of the safety measures will continue to exist like the Hands-Free Remote Device Management, clean Warehouse Best Practices, checking temperatures, asking for symptoms, etc, and a generous sick-leave policy.
The current vaccination drives across the country has helped in containing the spread & people are slowly returning back to their workstations including warehouses & logistics. This is going to help in a big way in recovering the economy of the country in the coming days.
