The Transforming

Landscape of Indian
Warehousing

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 Advance - The Transforming Landscape of Indian Warehousing Advance - The Transforming Landscape of Indian Warehousing 
Executive Summary
The Index of Industrial Production (IIP) recorded
a compound annual growth rate (CAGR) of 6.0%
during the past decade. The y-o-y double-digit
growth witnessed in the industrial production of
the mining, manufacturing and electricity sectors
during August 2009 reinforces the industrial
revival and the countrys economic recovery.
In a survey conducted by the World Bank in
2007, India was ranked 39th in the Logistics
Performance Index (LPI) and was identified as
a comprehensive reformer in the process of
transitioning from being a logistics-unfriendly
state to being a logistics-friendly one.
According to the Jones Lang LaSalle Meghraj -
Confederation of Indian Industries warehousing
survey, the retail goods sector was identified by
the industry as the top demand generator during
2009. Going forward, the warehousing demand
from the agriculture sector is likely to grow more
than any other sector by 2011.
With major roadways and railways projects
such as Golden Quadrilateral highway network,
North-South and East-West road corridors and
Diamond Rail Corridor, inter-modal logistics is
expected to gain prominence in the future.
In order to study the warehousing attractiveness
of various cities in India, Jones Lang LaSalle
Meghraj has initiated a study to assess the
potential and gaps for organised warehousing
across 37 cities, aggregating to a total
population of 143 million. The rankings have
been formulated through an analytic hierarchy
process (AHP) covering nearly 52 city-level and
state-level parameters to segment the Indian
warehousing landscape in to primary, secondary
and tertiary hubs.
With excellent multi-modal connectivity to
other regions of the country, six of the seven
primary hubs lie on the Golden Quadrilateral,
the most expansive network of expressways in
the country. As the administrative capital of their
respective states, they are the most urbanised
locations in their region and have a large
population.
Well connected by primary infrastructure
arterials, a majority of secondary hubs are
situated in the western and southern zone of
India. With sizeable catchments of urban and
rural population, they are attractive emerging
locations for warehousing.
Agriculture accounts for a significant share of
warehousing demand at the tertiary hubs. With
plenty of labour and land available at rational
costs, good infrastructural connectivity can
propel some of these locations to become
attractive warehousing hubs in the future.
Retail goods contribute a significant share of
the warehousing demand at all the primary
hubs due to their sizeable demographics
and consumption. EXIM cargo contributes
considerable demand for warehousing at the
port cities of Mumbai, Kolkata and Chennai.
Several major logistics parks are currently
under development across the country around
the major logistics hubs of Mumbai, Bangalore,
Chennai, Hyderabad and NCR. Speciality
logistics parks catering to industries such as
agriculture, automotive, electronic hardware and
aerospace industry are under various phases
of construction across the country. Various rail-
linked and multi-modal logistics parks are also
being developed.
The growth of organised warehousing towards
an intelligent future will heavily rely on how
effectively industry players and the government
can work together to address key challenges
such as the availability of affordable land at
desired locations, integration of various modes
of logistics, taxation and regulatory policies,
standardisation of warehouse specifications
across geographies, adequate infrastructure
and availability of professional manpower.
 Advance - The Transforming Landscape of Indian Warehousing Advance - The Transforming Landscape of Indian Warehousing 

Indian Logistics Industry

Against this backdrop of tremendous expansion
across sectors, the logistics industry assumes Figure 2: Logistics Performance Index of Bric Nations
a pivotal role in reducing costs by improving Customs
Introduction efficiencies and increasing competitiveness. 5.0
The Indian economy has witnessed remarkable rates of 12.9%, 10.2% and 10.6%, respectively, as In a survey conducted by the World Bank in 4.0
Timeline Infrastructure LPI Rank Countries
growth in recent years supported by market compared to August 2008. The double-digit growth 2007, India was ranked 39th in the Logistics 3.0
Performance Index (LPI), with Singapore topping 2.0 1 Singapore
reforms, inflows of foreign direct investment (FDI), of the industry during August 2009 reinforces
the survey and China ranking 30th (Figure 2). 1.0
information technology and real estate booms, and the industrial revival and the countrys economic 30 China
0.0
an expanding capital market. With a population recovery. According to the World Bank, India is identified
39 India
of more than a billion people, the country has to be a comprehensive reformer1 in the
Domestic International
According to United Nations Conference on Trade process of transitioning from being a logistics- Logistic Shipments 61 Brazil
witnessed a phenomenal increase in consumption
and Development (UNCTAD) in a new report Costs
and tremendous opportunities for organised unfriendly state to being a logistics-friendly one. 99 Russian
on world investment prospects titled, World Significant improvements can be witnessed in Federation
retailing and manufacturing industries.
Investment Prospects Survey 2009-2011, India Tracking & Tracing Logistics Competence
the governments approach to the sector. Putting
The Index of Industrial Production (IIP), which has ranked third in terms of global foreign direct greater emphasis on road infrastructure & Source: World Bank Survey Connecting to Compete, 2007
recorded a CAGR of 6.0% during the past decade, investments in 2009, and will continue to remain dedicated freight corridors, simplifying tax policies
started witnessing declining growth rates during among the top five attractive destinations for and notifying free-trade warehousing zones are
the global slowdown in 2008-09 (Figure 1). international investors over the next two years. some of the recent measures that were taken.
Figure 3: Logistics Costs and Growth of 3PL
However, with improved market sentiment in the
The McKinsey Global Institute expects India In the recent downturn, the emphasis to reduce
first half of the current fiscal year, the IIP improved 0.9
to become the fifth-largest consumer market costs and improve efficiencies across sectors 0.8
its growth rate in July 2009 to 7.2% from the 6.8%

Share Of 3PL In Overall Logistics

Japan

7PL
in the world by 2012, rising from twelfth in has put the spotlight on the supply chain, where 0.7
estimated earlier. Buoyed by the slew of measures China, India
2005. Aggregate Indian consumer spending is there are ample opportunities to value-engineer 0.6
taken by the government, the indices of industrial US
likewise estimated to more than quadruple to US

4PL/5PL
production for the mining, manufacturing and processes. Logistics costs2 equate to about 13% 0.5
approximately USD 1.5 trillion by 2025. of Indias GDP, which is significantly higher than 0.4
electricity sectors for August 2009 recorded growth Europe
Europe
those of the developed nations of Europe and 0.3
Japan
the US, where they equate to only about 10%3 0.2
Figure 1: Macro-economic Indicators of the Indian Economy

3PL
(Figure 3). The emergence of outsourcing along 0.1
China, India
300 12 with the consolidation of 3PL players would result 0
Index of Industrial Production (IIP)

0.08 0.1 0.12 0.14

250 10 in improving efficiencies and lowering costs in the
supply chain. Estimated Logistics Costs Equated To % Of GDP
GDP Growth (%)

200 8
Source: Logistics in India, SSKI
150 6 Critically, only about 6% of the Indian logistics
industry is organised, while the rest is riddled
100 4
with inefficiencies and low levels of innovation
Figure 4: Projected Growth of Organised Logistics in India
50 2 (Figure 4). However, organised logistics market
share is expected to grow to about 14% of the 14%
0 0
total Indian logistics industry by 2011. Despite 6%
1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

this, the advance concepts of customer support, 2007 2011F

007 Organised
inbound logistics and reverse logistics have yet to
Unorganised
Gross Domestic Product (GDP) Index of Industrial Production gain traction in this fragmented and technically-
94%
challenged environment. India is currently in the 86%
Source: Central Statistical Organisation, Global Insight
midst of a first wave of logistics outsourcing with a
Source: SSKI, Accenture
fragmented market of 3PL players.
1 Comprehensive reformers have a strong coalition for change implementing core reforms (customs, infrastructure and services), affinity to work across administrative silos to consistently implement the
reforms and favour a competitive service industry by lowering barriers to entry. (Source: Connecting to Compete 2007, World Bank)
2 Logistics Costs include transportation costs, inventory carrying costs and logistics administration. (Source: US Department of Transportation)

3Logistics in India, SSKI

 Advance - The Transforming Landscape of Indian Warehousing Advance - The Transforming Landscape of Indian Warehousing 

Warehousing in India Growth of the Warehousing Industry

With the growth of organised
warehousing and an expected
simplification of existing tax
structure, warehousing in
India is witnessing a paradigm
shift towards large logistics
parks with state-of-the-art
facilities.
Modern warehousing forms an integral part of the
supply chain where goods are not only stored for
safekeeping, but several value-advance processes
are implemented to process inventories, thereby
minimising obsolescence and reducing wastage.
Warehouses are being used for critical functions
such as stockpiling, product mixing, value addition,
distribution and customer service.
Traditionally, warehousing in India has featured
small unit sizes. Although indigenous constraint-
based innovation has taken place at various
levels, the lack of world class standards and
specifications poses a significant challenge
to other growth sectors that rely on logistics
and warehousing. An indirect tax structure has
incentivised companies in India to maintain
separate warehouses in different states.
With the growth of organised warehousing and an
expected simplification of existing tax structure,
warehousing in India is witnessing a paradigm
shift towards large logistics parks with state-of-the-
art facilities.
In this paper, we establish the major demand
generators and facilitators of the industry as India
continues to position itself on the world logistics
map. Further, we present the transforming
landscape of the warehousing industry by
analysing various locations within the large
Indian geography for their attractiveness towards
organised warehousing. The challenges posed to
the growth of the industry are critically examined in
the current context and elaborates on to probable
future growth patterns in the warehousing sector.
The growth of the Indian warehousing sector and advent of technological advancements, the The growth of the Indian
is primarily driven by the industrial growth demand for organised and automated warehouses warehousing sector is
primarily driven by the
of the country. While the Indian economy is is likely to be the future of warehousing in India.
industrial growth of the
predominantly driven by the service-based (Figure 5) country. While the Indian
industry, manufacturing also acts as a key growth economy is predominantly
driver for economic activity. Both services and Key Demand Generators driven by the service-based
A survey of top logistics service providers was industry, manufacturing also
manufacturing have thus far been the key demand
conducted by Jones Lang LaSalle Meghraj acts as a key growth driver
generators for warehousing space in India.
and the Confederation of Indian Industry in for economic activity. Both
services and manufacturing
While export/import (EXIM) cargo, agriculture and September 20094. Each respondent was asked have thus far been the key
manufacturing (textile and auto / auto ancillary) to rate individual demand drivers on a scale of 1 demand generators for
have been identified as traditional growth to 5, with 1 indicating the lowest level of demand warehousing space in India.
drivers that have contributed to the demand for and 5 indicating the highest. While the survey
successfully captured the industrys perspective on
warehouse space in India, new growth drivers
key demand generators as of 2009, the findings
such as organised retail, information technology,
also highlighted the industrys forward-looking
telecommunications and healthcare are the
perspective on the relative importance of these
sunshine industries that have been identified with
sectors in driving the warehousing industry in
huge growth potential after economic liberalisation. 2011(Figure 6).
With the growth of the above mentioned industries

Figure 5. Drivers of the Warehousing Industry

5th largest consumer Containerised traffic to

market in the world by 2025 grow by average rate of
(McKinsey) Demand 18% annually over the next
Generators decade (SCI)
Retail market to grow to
USD 419.93 billion by 2015
(McKinsey) ORGANISED RETAIL EXIM CARGO

18.5% of Indias GDP Governments Investment

target of USD 20.38 billion
Agri-exports grew by 25% in over the next two years in the
2008-09; expected to double infrastructure sector
in next five years to USD 18
billion (Apeda)

Approval to 60 agri-export
zones AGRICULTURE INFRASTRUCTURE

Top 12 producers of LOGISTICS & Expected phase out of

manufacturing value added WAREHOUSING Central Sales Tax and
- MVA (UNIDO) implementation of Goods
and Services Tax (GST)
Investment opportunity of
USD 180 bn in next 5 years Facilitators Free Trade and Warehousing
(Investment Commission) MANUFACTURING POLICY SUPPORT Zones (FTWZs)

Source: As Mentioned

4 Jones Lang LaSalle Meghraj (JLLM) and Confederation of Indian Industries (CII) conducted a warehousing survey of 26 major logistics players in India including owners, occupiers and developers.
The results of the survey have been published in the relevant sections.
 Advance - The Transforming Landscape of Indian Warehousing Advance - The Transforming Landscape of Indian Warehousing 
Figure 6: Key Demand Generators for Warehousing
Retail Goods
Agriculture
Automotive /
Auto-Ancillary
Telecommunications
/ IT
EXIM Cargo
Pharmaceutical
/ Medical
Textiles
0 1
Low Demand
Source: JLLM - CII Warehousing Survey, September 2009
While retail goods was identified as the top
demand generator in 2009, the demand for
warehousing services from agriculture is likely to
grow more than any other sector by 2011. The
survey also revealed that while the demand from
EXIM cargo will remain at 2009 levels until 2011,
fast-expanding sectors such as automotive/auto-
ancillary, telecommunications/IT, pharmaceutical/
medical and textiles will increasingly drive the
demand for organised warehousing in India over
the medium term.
Growth of Infrastructure
Infrastructure serves as a key facilitator for the
growth of warehousing industry in India. Rising
industry challenges owing to the lack of world
class infrastructure have exerted tremendous
pressure on the Indian government, and hence,
infrastructure has remained the key area of focus
during the union budget 2009-10. For the transport
sector, funding earmarked for the national
highways development program increased by
23%, while funding for railways has increased by
close to 45%. In the power sector, allocations for
the power development program have increased
by 160%. According to the Planning Commission,
USD 494 billion of investments are proposed
for the Eleventh Plan period (2007-12), which
would significantly increase the share invested
in infrastructure. Apart from the increase in
government funding for infrastructure projects,
4.0
3.0 1.5
2.8 0.8
3.2 0.2
3.3
2009
2.3 0.7
Change in 2011
2.4 0.4
2 3 4 5
High Demand
the Indian government also initiated public private
partnerships (PPPs) to drive fresh investments in
infrastructure projects.
Road Infrastructure
Since a major portion of freight movement in India
is transported via roadways, road infrastructure
plays a crucial role in the growth of logistics and
warehousing industry. The Indian government
has recently initiated a project to connect the
North-South and East-West Corridors through
world class road infrastructure. As this project
will significantly bring down the logistics costs, it
is likely to act as one of the key growth facilitator
for the logistics and warehousing sectors. The
project would consist of a 7,300-km-long corridor
connecting Kashmir to Kanyakumari and Silchar
to Porbandhar. While the North-South expressway
will go from Jammu to Kanyakumari through Delhi,
Bhopal, Hyderabad, Bangalore and Coimbatore,
the East-West expressway will run from Silchar to
Somnath through Kolkata.
Apart from the above-mentioned projects, the
National Highway Authority of India (NHAI),
under its national highway development program
(NHDP), has undertaken a major and challenging
project to connect the major ports of India. This
initiative will act as a key driver for the multi-modal
and inter-modal connectivity.
0.8
Retail goods was identified as
the top demand generator in
2009 followed by agriculture
which is likely to grow more
than any other sector by
2011. Other key sectors that
would generate demand for
organized warehousing in
India include EXIM Cargo,
automotive/auto-ancillary,
telecommunications/IT,
pharmaceutical/medical and
textiles.
According to the Planning
Commission, USD 494
billion of investments are
proposed for the Eleventh
Plan period (2007-12),
which would significantly
increase the share invested
in infrastructure. The
Indian government has
also initiated public private
partnerships (PPPs) to drive
fresh investment in the
infrastructure sector.
Port Infrastructure
The Indian coastline contributes to the freight
movements in and out of the country through 12
major ports and 187 minor ports. According to the
Indian Ports Association, the cargo traffic handled
by these major ports was recorded at 519.2
million tonnes (MT) in 2007-08, which was 12%
above 2006-07 levels. It is noted that in 2008-09,
cargo traffic at major ports increased to 530.4 MT,
which is a marginal 2% y-o-y increase. Although
the percentage increase in the amount of cargo
traffic handled by major ports during 2008-09
has declined since the previous year, demand
is expected to bounce back as global markets
recovery.
According to the Planning Commission, there is an
investment opportunity of USD 25 billion by 2011-
12 in Indias shipping and ports sectors as the
country seeks to double its ports capacity to 1,500
million tonnes. Aimed at increasing port traffic
efficiency, the Indian government has identified
276 projects entailing an investment of USD 12
billion. The following are some of the initiatives
taken by the Indian government to improve port
infrastructure, which in turn is likely to drive the
growth of logistics and warehousing sectors as a
whole in the long term.
The Indian government has set up the National
Maritime Development Plan (NMDP) to improve
the facilities at Indias 12 major ports through a
planned expenditure of USD 12.4 billion.
The Ministry of Shipping will launch ten major
expansion projects in 2008-09 at an estimated
investment of USD 1.06 billion.
100.0% of foreign direct investment (FDI) under
the automatic route will be permitted for port
development projects.
Air Infrastructure
According to Airports Authority of India (AAI), the
Indian air cargo in terms of volume is expected
to grow at a CAGR of 11.5% from 2007-08 to
2011-12. Of this, the CAGR of international air
cargo is expected to be 12.2% while domestic air
cargo would be 10.15%.The total air freight traffic
(international and domestic) in India handled as of
June 2009 has increased by 4% over June 2008.
However, the total air freight handled worldwide in
June 2009 dropped by 14% compared to June 2008
with international and domestic freights dropping
significantly by 16.5% and 5.8%, respectively.
Although the decline in international freight was
mainly attributed to the collapse of the global export
trade, it was interesting to note that there was an
increase in Indian freight traffic, which indicates a
higher growth after the economic recovery.
As Indias airports are finding it increasingly difficult
to cope with the rising volume of air cargo, the civil
aviation ministry is working to achieve significant
10 Advance - The Transforming Landscape of Indian Warehousing Advance - The Transforming Landscape of Indian Warehousing 11
In order to promote rail
infrastructure in the country,
the Indian government has
tied up with the government
of Japan which has recently
committed an amount of INR
1.3 billion as an engineering
services loan for phase I of
the Dedicated Freight Corridor
project.
improvements that will decongest traffic in this
sector. This initiative would greatly enhance the
quality of trade in the express and logistics industry.
One such initiative is the proposed MIHAN (Multi-
Modal International Hub Airport) project at Nagpur.
As Nagpur is strategically located in the centre of
the country, it is likely to act as an effective hub-
and-spoke distribution centre of India.
Rail Infrastructure
Aimed at coping with the increase of freight
transport demand in India by constructing a
new dedicated freight railway system, the Indian
railways has commissioned the Diamond Rail
Corridor project, which is a dedicated freight
corridor (DFC) to connect the western and
eastern rail routes. This project is expected not
only to facilitate efficient and cost-effective freight
traffic in this corridor, but also would result in
the improvement and modernisation of existing
inter-modal logistic systems. The existing western
rail corridor passes through Uttar Pradesh, Delhi,
Haryana, Rajasthan, Gujarat and Maharashtra.
The eastern rail corridor will run from Ludhiana
to Kolkata via Dankuni, covering the states of
Punjab, Uttar Pradesh, Bihar, Jharkhand and West
Bengal. The commissioning of DFC is expected to
reduce the transit time between Delhi and Mumbai
from 60 to 36 hours, as well as reduce the cost of
operations.
In order to promote rail infrastructure in the
country, the Indian government has tied up with
the government of Japan which has recently
committed an amount of INR 1.3 billion as an
engineering services loan for phase I of the
Dedicated Freight Corridor project.
Policy Support
Free Trade Warehousing Zone (FTWZ) Act
The government of India had announced in the
Foreign Trade Policy 2004-09 that it will set up
Free Trade and Warehousing Zones (FTWZ) to
create trade-related infrastructure to facilitate
the import and export of goods and services with
freedom to carry out trade transactions in free
currency. According to the Special Economic
Zones Act 2005, a Free Trade and Warehousing
Zone (FTWZ) is a special category of Special
Economic Zone and is governed by the provisions
of the SEZ Act and the Rules.
With the minimum size of the warehousing space
stipulated at 0.1 million sqm, the development
of FTWZ is permitted by the government of
India with 100% foreign direct investment (FDI).
This strategic move by the Indian government
is expected to generate more employment
opportunities as a result of increase in
competitiveness among respective industries,
apart from promoting organised warehousing,
which in turn is likely to boost the overall economic
activity of the country.
Warehousing Development and Regulation Act
The Warehousing Development and Regulation
Act (WDRA) is intended to make provisions for
the development and regulation of warehouses,
negotiability of warehouse receipts, establishment
of a Warehousing Development and Regulatory
Authority and for matters connected therewith or
incidental thereto.
The implementation of the WDRA has addressed
a long-felt need of the industry. The act enables
farmers to use the warehousing receipts as a
prime tool of trade to ensure safekeeping of farm
goods in accredited warehouses. The provisions
of the WDRA also lead to increased efficiencies in
the lending portfolios of banks, as well as further
enhance the interests of lending institutions
in ensuring credit with reference to goods in
warehouses.
With the appointment of a warehousing regulator
in the short term by the government of India, the
above-mentioned act can be enforced as a law to
ensure smooth functioning to fuel the growth of the
organised warehouses in the future.
The Landscape of Indian Warehousing
Locating a Warehouse
As with the other real estate sectors, the maxim
location, location, location still holds true for
warehousing. Optimal warehousing locations
depend on the proximity to major demand-supply
hubs, quality of infrastructure, availability and
quality of transport, geo-political stability and
operational costs. In the Jones Lang LaSalle
Meghraj - CII Warehousing Survey, respondents
were also asked to rank various parameters that
they would consider when selecting a warehouse
(Figure 7).
The results of the survey indicate that industry
stakeholders perceive proximity to demand and
Figure 7: Factors Considered while Selecting a Warehouse Location
Access to Markets
Proximity to Road Network
Access to Suppliers
Proximity to Rail Network
Access to Manufacturing Units
Proximity to Airports
Warehousing Space Costs
Proximity to Ports
Availability of Skilled Labour
Labour Costs
0 1
0 - Least Important
Source: JLLM - CII Warehousing Survey, September 2009
supply hubs, along with quality infrastructure, to Policy initiatives such as Free
be of paramount importance over other factors Trade and Warehousing Zone
when selecting a warehousing location. Access to (FTWZ) and Warehousing
Development and Regulation
markets, suppliers and manufacturing units were
Act (WDRA) aim to organise
considered extremely important, as were proximity the industry through
to road, rail and air networks. Availability of international best practices in
skilled labour, manpower and warehousing space a regional context.
costs, and proximity to ports were considered
less important. However, experts feel that going
forward, as the industry becomes more organised
and technology is extensively used in operations,
the availability and costs of skilled labour would
gain in importance.
Warehousing Attractiveness Index
India has a vast geographical spread covering
about 3.3 million sq km with a coastline of 7,517
km. Due to the large expanse of landmass, there
are geographical disparities that have shaped
regional demographics and the development
of various locations. There are infrastructural
advantages and limitations that have also
contributed to variations in regional growth,
thereby creating a differential demand map for
warehousing at various locations. The Jones Lang
LaSalle Meghraj Warehousing Attractiveness
Index maps various locations in India,
assessing their potential and gaps for organised
warehousing. Encompassing over 50 city-level and
state-level parameters, the rankings have been
formulated through an analytic hierarchy process
4.1
4.0
3.8
3.8
3.7
3.5
3.3
3.1
3.0
2.4
2 3 4 5
5 - Most Important
12 Advance - The Transforming Landscape of Indian Warehousing Advance - The Transforming Landscape of Indian Warehousing 13

Figure 8: Analytic Hierarchy Process (AHP) for Evaluating Warehousing Attractioness of Indian Cities Figure 9: Warehousing Attractiveness Of locations in terms of access to markets and
Indian Cities manufacturing units. With sizeable catchments
Warehousing Attractiveness of urban and rural population, they are attractive
GOAL

Primary Hubs
To rank cities on the basis of their potential for warehousing emerging locations for warehousing. Secondary
1 NCR-Delhi
hubs support tertiary hubs to some extent.
2 Mumbai
3 Chennai
CRITERIA

Facilitators Index Demand Index 4 Bangalore
5 Kolkata
6 Hyderabad
7 Pune
Infrastructure
Secondary Hubs
Roadways, Railways, Airways, Ports, Power
8 Ahmedabad
SUB-CRITERIA
Tertiary Hubs
While some tertiary hubs are strong markets, the
lack of quality infrastructure has hindered their
development either as warehousing or industrial
hubs. Agriculture forms a significant share of
warehousing demand at some of these locations.
With the expected growth of organised retail,
warehousing space would be increasingly required

Policy Support Economy 9 Surat at these locations, which also serve as important
Geo-political risk, Taxes, Investment climate Industrial & Agricultural growth, Growth of trade
10 Goa linkages to rural locations at the heart of India.
Demography 11 Chandigarh With plenty of labour and land available at rational
Labour Availability
Population, Per capita income, Retail consumption 12 Kochi costs, good infrastructural connectivity can propel
13 Visakhapatanam some of these locations to become attractive
Costs
Land costs, Rents, Labour costs 14 Nagpur warehousing hubs in the future.
15 Coimbatore
Warehouses Managed by Public Sector
Source: Jones Lang LaSalle Meghraj Research 16 Thiruvananthapuram
Agencies
17 Jaipur
Currently, a vast majority of the organised
(AHP), wherein the final index is ascertained Secondary and Tertiary hubs (Figure 9). 18 Vadodara warehouses in India are maintained by public
through several simpler independent sub-indices 19 Nashik
Primary Hubs sector agencies - the Central Warehousing
(Figure 8). 20 Indore
The primary hubs are the major metropolitan cities Corporation (CWC), State Warehousing
The major factors that determine the potential of a in India - three of which have the most active ports 21 Mangalore Corporations (SWCs) and the Food Corporation of
location for its attractiveness for warehousing have and airports of India. With excellent multi-modal 22 Ludhiana India (FCI). As of September 2009, FCI manages
been categorised into two indices - Facilitators connectivity to other regions of the country, six of 23 Guwahati storage capacity of 27.7 million tonnes, while CWC
Index and Demand Index. The primary facilitators the seven cities lie on the Golden Quadrilateral, manages 9.9 million tonnes (Figure 10).
Tertiary Hubs
identified for warehousing are infrastructure, the most expansive network of expressways in
Agra Figure 10: Storage Capacity of Warehouses Owned by FCI & CWC
policy support, labour availability and costs. The the country. As the administrative capital of their
respective states, they are the most urbanised Allahabad
Demand Index is generated through several Food Corporation of India Central Warehousing Coporation in India
economic and demographic indicators. Economic locations in their region and have a large resident Amritsar 35
indicators include several parameters for growth population. With a huge labour pool and industrial Bhopal 30
districts in the periphery, these cities score as

31.7
Bhubaneshwar

Capacity (Million Tonnes)

of agriculture and industries, and demographic 25

27.7
established locations for warehousing. Functioning

27.2
parameters include the consumption and income Jalandhar

26.0

25.6

25.2

23.9
as primary hubs in the supply chain, they also 30
demographics of the region. Current capabilities Jodhpur
as well as possible development trajectory due support the secondary hubs in vicinity. Availability 15
Kanpur
to ongoing and proposed projects have been and cost of land is a concern in these cities as
Lucknow 10
massive urbanisation has resulted in expansion of
considered while creating the sub-indices. Our

10.2

10.3

9.9
9.8

9.9
Meerut 5

9.2

9.3
city limits and escalation in land prices.
analysis covers 37major Indian cities, aggregating
Mysore 0
to a total population of 143 million. These cities
Secondary Hubs Patna 2003 2004 2005 2006 2007 2008 2009
were selected on the basis of their geo-political
Well connected by primary infrastructure arteries, Varanasi Source: Food Corporation of India, Department of Food and Public Administration
and demographic importance in the urban fabric
a majority of secondary hubs are situated in the Note: Figures for FCI Include Covered and Cap (Cover and Plinth) Storage Capacities.
of the country. On the basis of the analysis, the Vijayawada Figures for CWC Include Covered/Owned and Covered/Hired Storage Capacities.
western and southern zone of India. They serve
cities have been ranked and grouped into Primary, Source: Jones Lang LaSalle Meghraj Research * Figures are as of September 2009
as regional industrial hubs and are important
14 Advance - The Transforming Landscape of Indian Warehousing Advance - The Transforming Landscape of Indian Warehousing 15

Figure 11: Major Warehousing Hubs in India Figure 12: Major Logistics Hubs in India

NCR Mumbai Chennai Bangalore Kolkata Hyderabad Pune

Average Land Cost1 5 - 20 6 - 30 5 - 14 8 - 20 12 - 27 5 - 20 6 - 17
Average Rents2 10 - 16 9 - 18 12 - 14 9 - 12 14 - 18 7 - 11 9 -18
Major Palwal Bhiwandi Sriperumbudur Tumkur Rd Dhulagarh Kompally Chakan
Warehousing
Locations Jamalpur Panvel Irungatukottai Hoskote Ankurhati Gundlapochampally Talegaon
JAMMU AND KASHMIR
Bhorah Kalan Taloja Oragadam Mysore Rd Hide Road Medchal Wagholi

The Landscape of Lohari Rasayani Maraimalainagar Devanahalli Kona Patancheru Shirval

HIMACHAL Dharuhera Pathalganga Madavaram Hosur Rd Dankuni Shamshabad

Amritsar
Ludhiana
PRADESH
Jalandhar Indian Warehousing Source: Jones Lang LaSalle Meghraj Warehousing and Logistics Solutions
Note: [1] Average Land Cost is in INR million per acre
PUNJAB [2] Average Rents are in INR per sq ft pm
Chandigarh
UTTRAKHAND
HARYANA
NCR
Meerut ARUNACHAL PRADESH While the Multi Commodity Exchange of India activity, which further creates demand for
1 NCR UTTAR PRADESH
Agra
(MCX) owned National Bulk Handling Corporation warehousing space. A significant amount of cargo
RAJASTHAN SIKKIM
Lucknow (NBHC) manages 13.1 million tonnes of organised originates from Indias south and west regions due
Jaipur ASSAM
Jodhpur Kanpur Guwahati
NAGALAND
storage capacity in the country, NCDEX owned to a large number of established industrial hubs
BIHAR
Varanasi
National Collateral Management Services and sea ports. Hence, the flow of cargo traffic
MEGHALAYA
Patna manages 5.9 million tonnes. from Indias south and west regions to its east and
Allahabad MANIPUR
north regions is much higher than in the reverse
Kandla Ahmedabad TRIPURA Regional Demand for Warehousing direction.
Bhopal
JHARKHAND MIZORAM
Retail goods contribute a significant share of the
Indore WEST
Vadodara MADHYA PRADESH
BENGAL warehousing demand at all the primary hubs due Emergence of logistics parks
GUJARAT Kolkata
Surat to their sizeable demographics and consumption. Several major logistics parks are currently under
CHHATTISGARH 5 Kolkata EXIM cargo generates considerable demand for development across the country around the major
ORISSA Paradip
Nashik Nagpur warehousing in the port cities of Mumbai, Kolkata logistics hubs of Mumbai, Bangalore, Chennai,
and Chennai. NCR-Delhi also enjoys warehousing Hyderabad and NCR.
Bhubaneshwar
2 Mumbai Mumbai MAHARASHTRA demand from a variety trade activities (Figure 13).
Speciality logistics parks catering to industries
6 Hyderabad Due to the location of automotive industries, such as agriculture, automotive, electronic
Pune Visakhapatnam
Pune Hyderabad warehousing demand for automobiles and hardware and aero-industry are under various
7
auto-ancillary products is prominent in Chennai, phases of development across the country.
Vijayawada NCR-Delhi, Mumbai, Pune and Ahmedabad. Various rail-linked and multi-modal logistics
Goa
These cities are also sizable markets for parks are also being constructed. About 861
Golden Quadrilateral automobile sales. Indias eastern region is rich in acres of land have been identified as Free Trade
GOA
ANDHRA PRADESH
minerals, textile and agri-prodiucts. Having a large Warehousing Zones (FTWZs) in India, which have
KARNATAKA North-South Corridor
4 Bangalore Ennore been envisaged as global trading hubs in the
Mangalore East-West Corridor
population, this region has strong consumption
3 Chennai Western DFC Line
Mysore Bangalore Chennai Figure 13: Major Demand Generators for Warehousing
Eastern DFC Line
TAMIL NADU
KERALA EXIM Cargo Retail Goods Automotive Textiles Pharmaceuticals IT and Telecom
International Airport
Coimbatore Ahmedabad P P P P
Kochi D omestic Airport
Tuticorin Bangalore P P P
Major Sea Port
Chennai P P P P
Hyderabad P P P
Thiruvananthapuram
Kolkata P P P P
Mumbai P P P P
Note: The proposed infrastructure developments including routes for various projects shown on the map are for illustration purposes only. Users of this NCR-Delhi P P P P
information should review or consult the primary data and information sources to ascertain the usability of the information. Pune P P P
Source: Jones Lang LaSalle Meghraj Research Source: JLLM CII Warehousing Survey, September 2009
16 Advance - The Transforming Landscape of Indian Warehousing Advance - The Transforming Landscape of Indian Warehousing 17

Figure 14: Upcoming Free Trade and Warehousing Zones (FTWZs) in India
Name of Developer Location State Acres Type Approval Status demand for warehousing space perishable Agri- to come up with clear-cut rules and regulations will Implementation of global
products. not only curb illegal warehousing activities in the best practices to integrate
Free Trade Warehousing Private Ltd Haldia West Bengal 45.7 FTWZ Formal and offer world class modern
(FTWPL) country but also act as a building block to enhance
The growth of organised warehousing towards an warehousing facilities through
Balaji Infra Projects Ltd (BIPL) Raigadh Maharashtra 100.0 FTWZ Formal the logistic value chain. This will in turn facilitate the use of technological
intelligent future will heavily rely on how effectively
deeper domestic and international penetration into advancements is likely to
Jafza Chennai Business Parks Thiruvallur Tamil Nadu 136.4 FTWZ Formal industry players and government can work
the Indian warehousing landscape. be the future action plan for
Chiplun Infrastructure Pvt Ltd Mumbai Maharashtra 40.0 FTWZ Formal together to address challenges in the short term. warehousing industry majors.
J.Matadee Eco Parks Pvt Ltd Kancheepuram Tamil Nadu 40.6 FTWZ Formal The expected phase-out of Central Sales Tax and
Land Availability the implementation of Goods and Services Tax
Jhunjhunwala Vanaspati Chandauli Uttar Pradesh 103.6 Multi-services SEZ Formal
with FTWZ Procurement of land in a desirable location with (GST) in the coming years would have a profound
Greater NOIDA Integrated Greater NOIDA Uttar Pradesh 80.0 FTWZ In-Principle clear title and proper approvals is a key for any impact on the nature of the warehousing sector in
Warehousing Pvt Ltd (Earlier FTWPL) new entrant who wants to set up a warehouse. India. It would remove the need for decentralised
Arshiya Internation Ltd (AIL) Panvel Maharashtra 68.0 FTWZ In-Principle Due to the lack of existing clear land classifications warehousing in multiple states, thereby increasing
LMJ Warehousing Kandla Gujarat 40.0 FTWZ In-Principle in Indian cities, reclassification of land is a major operational efficiencies. The net effect would be
concern as far as developments of warehouse large warehousing spaces consolidated at primary
DLF Universal Ltd Amritsar Punjab 40.0 FTWZ In-Principle
zones are concerned. With land values attaining locations serving a vast region through secondary
Shipco Infrastructure Pvt Ltd (SIPL) Karnataka Karnataka 120.0 FTWZ In-Principle
their peaks during the past three to five years, the and tertiary hubs. Transit time and costs would be
Vibrant IL&FS Consortium Naigaon Maharashtra 46.9 FTWZ In-Principle
availability of affordable land is another concern reduced considerably due to improved efficiencies
Source: Free Trade and Warehousing Zones (www.ftwz.com)
for the industry. achieved such as the elimination of check-points
at state borders. The imposition of GST would
international supply chain (Figure 14). Principally houses and ripening chambers by 2012. Despite Multi-Modal Logistics
eliminate taxation as a factor in regulating the
governed by the Special Economic Zone (SEZ) Act the announcement of various incentives for cold Various modes of logistics and transport are
growth of industry and, instead, provide it with
2005 and SEZ Rules 2006, 100% foreign direct chains in the Union Budget 200910, investment preferred depending on the distance, destination,
a much needed breathing room where industry
investment has been permitted into FTWZs. in the sector has been lacking. High capital volume and type of goods to be delivered. The
stakeholders can focus on increasing efficiencies
needs, fluctuating revenue cycles and relatively options available to ensure prudent delivery of
Temperature-Controlled Storage and reducing costs in the supply chain through
low subsidies have worked as impediments goods include road, rail, air, sea or electronic
Temperature-controlled storage is used primarily other avenues.
for the development of temperature-controlled delivery. Although all these modes of transport
for fruits and vegetables, meat and marine are independently viable for different business
warehousing in India. Standardisation of Specifications
products, floriculture, dairy products, ice creams requirements, the key challenge is to integrate all
and confectionery. According to the KPMG-
Challenges and Road Ahead The demand for warehousing comes from
As Indian warehousing is in an initial phase these modes to ensure efficient delivery though a multitude of sources, which have specific
Assocham report released in August 2009, there is cost-effective means.
of life cycle development, the industry faces a needs. The lack of standards poses a significant
a shortage of 10 million tonnes of cold storage for
significant amount of challenges amidst growth A multimodal transport system that would challenge to the industry where quality and
agri-produce in India. India currently has around
opportunities. While the lack of sufficient physical integrate different geographical scales is yet flexibility of available warehousing space is a
21.7 million tonnes of cold storage against a
infrastructure is one of these challenges, the time to evolve in India. The development of new major concern. As we go forward, the demand
requirement of over 31 million tonnes. As a result,
lag between devising and implementing strategies modal and intermodal infrastructure would from occupiers is expected to pressure developers
more than 30% of agri-produce is lost in fields post
due to the lack of international warehousing bridge the rural urban divide with improved and owners to adopt the standards formulated
harvesting.
standards is another. With rising disposable cost-efficiency. Implementation of global best by the policymakers. Best practices need to be
According to the study, the Indian cold chain incomes, changing lifestyles and focus on rural practices to integrate and offer world class incorporated in the standards to increase safety
market in 2009 is worth USD 2.6 billion, which and agricultural related activities, the rural logistics modern warehousing facilities through the use and minimise wastage.
is expected to grow to USD 12.4 billion by 2015. sector has received special attention over the of technological advancements is likely to be the There is a dearth of quality temperature-controlled
The agricultural-intensive states of Uttar Pradesh past few years. Although there are significant future action plan for warehousing industry majors. storage spaces across the country despite a
and West Bengal have 65.0% of the total installed challenges, the huge potential for growth in rural
huge demand from several industry verticals. This
capacity of cold storage in the country. logistics has put the development of cold chain Tax and Regulatory Policies
creates tremendous opportunities in this sector,
warehousing infrastructure on the top of the The governments role to promote organised
The government of India has planned to create a where a substantial demand-supply mismatch is
governments priority list. This will not only provide warehousing is crucial along with private sector
capacity of 10 million tonnes of cold chains, pack likely to continue through the medium term.
rural employment opportunities but also meet the participation. The government of Indias initiative
18 Advance - The Transforming Landscape of Indian Warehousing Advance - The Transforming Landscape of Indian Warehousing 19
Infrastructure
The widening gap between the growth of
infrastructure and that of demand for organised
warehousing continues to remain a key challenge.
The improvements on the road, rail, airways and
port infrastructure combined with the increased
roll-out of technology to drive growth of modern
warehouses is the need of the hour in the India
warehousing industry.
While significant outlay has been done at a
macro-level, infrastructure at the warehouse
level also needs attention. The lack of adequate
physical infrastructure to promote the use of new
technologies such as radio frequency identification
devices (RFID), new supply chain tools and
e-commerce capabilities is acting as a major
challenge to managing the movement and storage
of goods.
Trained and Professional Manpower
Most of the warehouses in India today are
managed by carry & forward (C&F) agents who
have poor knowledge on the latest warehousing
technologies. Having a skilled work force to
manage the warehouses of tomorrow will not only
mitigate the risks of high inventory levels and
poor service offerings, but also help the industry
to make a paradigm shift towards intelligent,
automated and organised warehouses.
Figure 15: Critical Challenges Faced by Warehousing Industry
Affordable land at desired locations
Integration of various modes of logistics
Tax and Regulatory Policies
Standardization of warehouse
specifications across locations
Infrastructure (Rail/Road/Port/
Airport/Power)
Trained and professional manpower
0 1
Less Critical
Source: JLLM CII Warehousing Survey, September 2009
The Jones Lang LaSalle Meghraj - CII Warehousing
Survey asked respondents to score major challenges
faced by the industry on a scale of 1 to 5, where 1
and 5 indicate the lowest and the highest scores,
respectively, on the criticality of the challenge. Along
with the industrys perspective on key challenges as
of 2009, the findings of the survey also highlighted
the industrys perspective on the expected criticality of
these challenges in 2011 (Figure 15).
The availability of land at desired locations and
multi-modal logistics are highly critical challenges for
the industry today, and are expected to remain so in
the future. Although taxation policies are currently a
significant challenge and would continue to remain
critical for the next two to three years, the survey
reveals that its expected simplification should reduce
its criticality. Surprisingly, respondents did not perceive
infrastructure to be a major challenge, most likely
due to the massive focus on the issue from both the
public and private sectors. The availability of trained
and professional manpower was deemed as the least
critical of the challenges faced by the industry today.
However, with the growth of the organised sector
and the increasing use of technology, skilled labour
is expected to be employed in larger numbers by the
industry. Its availability may pose a greater challenge
in the future.
4.4
4.3
4.5
4.2
3.4
3.8
3.0
3.2
3.0 2009
3.2
2011
2.2
2.0
2 3 4 5
More Critical
Authors Profile
Hariharan Ganesan
Assistant Manager, Research and REIS
Jones Lang LaSalle Meghraj
Hariharan Ganesan joined the Jones Lang LaSalle Meghraj Research team in April 2008 and is
responsible for the Indian Real Estate Intelligence Service (REIS) publications. Based in Chennai, he
contributes to research deliverables on industrial, commercial, retail and residential real estate markets
in the country. Prior to joining the firm, Hariharan worked on research in different fields for two years in
India. He holds a dual degree from Bits Pilani and an MBA from IIPM, Delhi.
Himadri Mayank
Senior Analyst, Research and REIS
Jones Lang LaSalle Meghraj
Himadri Mayank joined Jones Lang LaSalle Meghraj Research team in July 2008 and is responsible for
tracking and monitoring market activity and trends in office, retail and residential property sectors for
Indian cities. Based out of Mumbai, he also contributes towards regional and local research publications
covering economy, sector analyses, market forecasts and investment strategies. He holds a degree of
B.Arch. from Indian Institute of Technology Kharagpur and has two years of experience in the field of
construction and architecture.
Avinash Mirchandani
Assistant Vice President, Research and REIS
Jones Lang LaSalle Meghraj
Avinash Mirchandani supports the Jones Lang LaSalle Meghraj India Research & REIS team. Based in
Mumbai, he provides guidance and oversight on all of the teams research outputs and bespoke client
projects. Avinash originally joined Jones Lang LaSalle in 2007 as the programme manager for the World
Winning Cities Research Programme, a multi-year research initiative conducted by our Global Research
team. Prior to that, he worked in a variety of consulting and research roles across the biotech, aerospace
and IT industries in the United States. Avinash holds a bachelors degree in Economics from UCLA and
an MBA from the Indian School of Business.
Abhishek Kiran Gupta
Associate Director, Research and REIS
Jones Lang LaSalle Meghraj
Abhishek Kiran Gupta leads the Jones Lang LaSalle Meghraj India Research team and is based in
Mumbai. He manages research operations on a Pan-India level and is responsible for the teams
outputs, including research reports such as topical white papers, property market digests and bespoke
research projects based on specific client requirements. Prior to joining Jones Lang LaSalle, he had
seven years of experience in market research, business analysis and market strategy consulting,
servicing diversified industries including pharmaceutical, software publishing and insurance.
Acknowledgements
We would like to acknowledge the invaluable guidance by Tushar Jani, Chairman, CII Logistics Western India, and the support from CII representatives.
Extensive contributions were also made from the Jones Lang LaSalle Warehousing and Logistics Solutions team who shared their knowledge and expertise
during our research and analysis. Rahul Singh and Nisha Poddar from Jones Lang LaSalle Meghraj Research also contributed significantly to this project.
About Jones Lang LaSalle
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