Union Budget 2021: Warehousing assets identified for monetisation programme

The Union Budget 2021 has identified warehousing assets for asset monetisation programme for core infrastructure assets.

Finance Minister Nirmala Sitharaman in her Budget 2021 speech on February 1 announced this would include assets under Central Warehousing Corporation. Other infrastructure assets that are identified under the monetisation programme include airports in tier 2 and tier 3 cities, three oil and gas pipelines and sports stadiums.

Warehousing transactions saw almost a threefold increase between FY17 and FY20, despite the decline the sector witnessed due to COVID-19.

As of FY20, India had about 307 million sq ft of existing warehouse stock across eight cities in the country. There is further potential to develop another 193 million sq ft.

Prime Minister Narendra Modi government had a huge focus on warehousing. Logistics, which include warehousing, was granted infrastructure status in 2017 helped the sector grow by attracting funding.

The demand for warehousing has increased over years driven by e-commerce, and third party logistics. According to a report by Knight Frank Research and Venture Intelligence, the amount invested in warehousing increased from $125 million in 2016 to $1895 million in 2019.

However, at the back of COVID-19, the investments declined. Compared to the $1,508 million PE investment between January and May 2019, the amount declined to $57 million for the same period in 2020.

Industry experts believe the sector is expected to benefit with the transition of retail from offline to online and increased adoption of e-commerce.