Warehousing sector in India gets boost as global supply chains shift from China
NEW DELHI : India has witnessed a remarkable surge in warehousing demand across key sectors, with figures rising from 15% in 2019 to 25% in 2024. This increase is primarily driven by favorable government initiatives and a global strategy to diversify supply chains away from China. Cities like Pune, Delhi-NCR, and Kolkata are emerging as key beneficiaries of this growth, further bolstering India’s manufacturing sector, which employs over 27 million people.
Factors Driving Warehousing Demand
According to a CBRE report, the demand for warehousing in sectors such as engineering, electronics, and auto manufacturing has increased significantly from 15% in 2019 to 25% in the first half of 2024. This shift is mainly attributed to:
Government Policies: The Production Linked Incentive (PLI) scheme is one of the primary government initiatives boosting demand for warehousing.
China +1 Strategy: Many global businesses are adopting a ‘China + 1’ strategy, where they diversify their supply chains away from China to other countries like India.
Growth in Warehousing Leasing
Total warehousing leasing from the aforementioned sectors reached an impressive 4.1 million sq. ft. in the first half of 2024.
Cities like Pune, Delhi-NCR, and Kolkata are at the forefront of this demand surge:
Pune: Its share of total demand grew from 6% in 2019 to 13% in 2024.
Delhi-NCR: This region witnessed an 18% share of the demand.
Kolkata: Warehousing demand in Kolkata has also increased,reaching 12% in 2024.
Sectoral Growth in Warehousing
India’s engineering and manufacturing sectors have leased 11% of the total warehouse space in 2024, up from 8% in 2023.
Some of the key drivers for this growth include: Domestic Appliances, Auto Components,
Automobile Industry.
These sectors are showing increased demand for warehousing as production and distribution needs continue to rise.
Importance of Manufacturing to India’s Economy
Manufacturing is a critical pillar of India’s economic growth, contributing approximately 14% to the GDP and employing over 27 million people. As per Anshuman Magazine, Chairman & CEO of CBRE, India’s manufacturing sectoris poised for a significant transformation and is drawing global attention.
Further, the continued economic development in Asia-Pacific markets is likely to drive consumer demand for manufactured goods, boosting sectoral growth.
warehousing and manufacturing growth:
GatiShakti National Master Plan: This initiative focuses on optimizing supply chains to improve efficiency.
National Logistics Policy: It emphasizes sustainable and cost-effective transport modes to enhance logistics efficiency.
Corporate Tax Cuts & GSTReforms: These measures, along with tax benefits for R&D, have enhanced India’s competitiveness on the global stage.
Strengthening Industrial Infrastructure
India’s strong industrial infrastructure plays a pivotalrole in supporting the growth of its manufacturing sector. According to Rami Kaushal, Managing Director of Consulting & Valuation Services at CBRE, this infrastructure not only simplifies the ease of doing business but also encourages collaboration and productivity.
Trade Agreement Boosting Manufacturing
India’s focusing on expanding trade agreements has opened up substantial opportunities for its manufacturing sector. As Ram Chandnani, Managing Director of Advisory & Transactions Services at CBRE India, noted, the country’s strategic trade focus can act as a catalyst for growth. Indian manufacturers are presented with a golden opportunity to
diversify their operations beyond services and capture a larger portion of the global manufacturing market.