Your cart is currently empty!
Think EXIM Think Innovation
CONCEPT PAPER ON WAREHOUSING
SJES131015 Dated:14th Oct’15
Evolution of Warehousing in India
Until decade ago, warehousing in India was a synonym for basic four-walled structures with sub-optimal sizes, inadequate ventilation & lighting, lack of racking systems, poor hygiene conditions and lack of inventory management or technology solutions such as Warehouse Management System (WMS). Although modern warehouses have begun to develop across India, there is still a significant growth story that remains to be played out in India.
Comparative Analysis of Key Variables in Warehousing Space
PARAMETERS | INDIA | CHINA | USA |
Market Maturity (Fragmentation by contribution of key players to the total industry cost) | · Unorganized, fragmented warehousing industry | · Highly fragmented, top 20 companies contribute to 7% of revenue | · 20 largest companies control less than 30% of the market |
Warehouse Infrastructure:
· Size · Centralization of warehouse · Infrastructure |
· Godowns with approx. size of <10,000 sq.ft
· Multiple warehouses, one in every state · Poor Infrastructure · High pilferage and loss |
· Market is fragmented in terms of operator’s geographical presence
· Average level of Infrastructure with small godowns |
· Warehousing companies operate a single facility of 200,000 sq.ft
· Excellent Infrastructure |
Value Added Services
|
Poor | Neutral | Good |
Level of Outsourcing
|
Poor | Poor | Good |
Skilled Labour
|
· Labour available but with poor training | · Labour available but with poor training | · Highly skilled trained Labour |
Technology Used
|
Poor | Neutral | Good |
Consolidation:
Level of usage of Large scale logistics parks & free trade & warehousing zones |
Poor | Neutral | Excellent |
Source: KPMG in Hong Kong Report on Transport in China (2008), Industry discussion
Although large, Most of the warehousing space in India lies with the unorganized players- largely on the domestic side.
Structure of the Indian warehousing Industry (2008)
85% 367 mn sq.ft 8% 36mn sq.ft
433 mn sq.ft
15% 66 mn sq.ft
92% 398 mn sq.ft
Source: KPMG Analysis
The Industry is undergoing a number of supply and demand changes as follows-
After the economic slowdown in 2008-09, India is again witnessing a surge in the need for storage space. According to an estimate, an additional 120 million sq.ft of warehousing space was needed by 2012 to bridge the demand-supply gap (accounting for announced projects), which in turn is a massive investment opportunity for the private sector.
Owing to multiple & differential state-level taxes, companies in India have set up multiple warehouses, often one per state (to minimize intra-state movements & associated taxation), servicing various parts of the country. This is extremely inefficient & leads to higher unit & inventory carrying costs. Effective April 2016, the govt. of India plans to implement a uniform Goods & Service Tax (GST). As a result there will be a significant re-organization of warehousing space in India. Several leading companies & logistics service providers have already set up these large warehouses, but many are in desperate need of capital and knowhow from foreign investors to capitalize on the opportunity.
Development of key infrastructure projects related to ports, highway & rail projects- such as the Golden Quadrilateral (GQ) project, NSEW Project, & Dedicate Freight corridor (DFC) is expected to create new warehousing hubs aligned to these infrastructure points.
Several players in India- such as Multi modal logistics park (MMLP), Mega Food parks (MFP) and Free Trade Warehousing Zones (FTWZs)- have announced next generation storage models.
Emerging Opportunities in India
STRATEGIC IMPERATIVE | CAPITAL DRIVEN VALUE ADDITION OPPORTUNITIES | EXAMPLE SEGMENTS |
CREATING NEW SEGMENT | · Bringing in Know-how from overseas markets
· Showcasing Proof of concept to customers & building awareness on the back of a strong global brand |
· 4PL
· Logistics Park · FTWZs · Air Cargo Complex · Shipbuilding & Shipyards |
GROWING THE SEGMENT | · Introducing processes to enable an efficient scale up
· Developing business plans for expansion · Sensible capital allocation · Providing HR & management bandwidth |
· 3PL
· Modern Warehousing · Project Logistics · Cold Chains |
CHANGE IN EXISTING & MATURE SEGMENTS | · Improving automation & tech adoption
· Migrating existing services to new industry segments · Access to new geographies or customers · Streamlining operations |
· CFS
· Courier Services · Offshore Logistics · Ports |
TRANSFORMATION | · Acquisitions of leading market players
· Process improvement · Cost & profitability management · Divestment or asset lightening |
· Freight Forwarding
· FTL Trucking · Shipping · NVOCC |
Impact of Regulatory changes on Warehousing in India:
Warehousing Development & Regulation Act 2007 (WDRA 2007)
Context of Discussions
Evolution of Warehousing / Storage
Warehousing – Historical Evolution (Regulatory History)
Historical Perspective
Warehousing – Historical Evolution (Regulatory History)
Gaps that Unorganized Players are incapable of Filling
Warehousing in Future – Pointing Trends
Few visible Growth drivers of the Economy
Warehousing – Issues and Challenges
Warehousing Development and Regulation Act, 2007
Why WDRA?
What is WDRA?
WDRA 2007 (Warehousing Development Regulation Act 2007)
Impact of WDRA – Significance to Farmers
Impacts of WDRA – Significance to Insurance Cos and Banks
Impacts of WDRA – Other Significance
Checklist for Bonded Warehousing Application with Indian Customs:-
Our Role as a Consultant on Warehousing
Prepared By-
Mr. Ravi Shekhar Jha
M/s S.J. EXIM Services
New Delhi
For Further Assistance on Public/Bonded warehousing please contact the undersigned:-
Reblogged this on S J EXIM Services and commented:
Warehousing in India!!
Hello,
Welcome to SJ EXIM, your corner of the internet dedicated to all things related to Indirect tax I Customs I Arbitration I Insolvency Advisory in India. Let’s craft a solution for you! Connect via email…..
Stay updated & join our newsletter.
Leave a Reply