vox pop | A crucial link

With the new government´s principal agenda being development and economic growth, the logistics sector is a fundamentally important enabler to the success of the Indian economy and a significant business in its own right.

Our Experts
Adarsh Hegde, Director, Allcargo Logistics
Vikas Anand, Managing Director, DHL Supply Chain India Pvt. Ltd
Aditya Bafna, Executive Director, Shree Shubham Logistics
R Ramdas, CFO, Continental Warehousing Corporation (Nhava Seva) Ltd
Vinod Asthana, MD, CRWC
Ajay Kakra, Associate Director, Agri & Natural Resources – PwC India

What are the opportunities in the Indian warehousing segment?
Adarsh Hegde
With a stable government at the Centre, focusing on reviving and scaling India´s economic growth rate, India´s warehousing space is at the helm of tremendous growth. As companies scale their sentiments and production through coming years in a conducive market environment, outsourcing of warehousing will be a more preferred option for creating efficiencies in the supply side value chain.

At present, only about 8-10 per cent of businesses look at outsourcing their warehousing, but as we move towards GST implementation and manufacturing and production gets a boost, India´s warehousing space will see new avenues of opportunities.

R Ramdas
Key growth drivers for warehousing in India are (i) growth of organised retail sector, with retail market poised to grow to $18 bn in the next five years, (ii) growth of e-tailing business is expected to create demand for warehousing, (iii) significant growth of agri sector, in particular, improvement in distribution by setting up agri-export zones, food parks, etc., (iv) investment in manufacturing sector, which will create huge opportunities for setting up warehouses and distribution logistic parks, (v) growth of exim trade leading to demand for warehousing near ports, (vi) investment by the GoI in infrastructure and (vii) policy initiatives, including introduction of GST, FTWZ, tax incentives, etc.

Vikas Anand
Large scale shared facilities with multiple users will set the platform for consolidation in the post GST scenario. GST will make large regional warehouses economically viable as opposed to the multiple small ones set up to deal with the current tax structure.

Vinod Asthana
The market consists of industrial and agriculture warehousing, with both segments expected to witness a significant evolution in their shares (by value) over the next five years. The share of the industrial segment, which includes both bulk and non-bulk commodities, is expected to increase.

Ajay Kakra
Very recently FCI has come out with these large scale silo projects in which they were looking at a PPP structure were private players were supposed to be creating 50,000 tonne silos and it had 200 million tonne capacity being planned.

What are the major roadblocks?
R Ramdas
One of the main roadblocks for setting up warehousing is land acquisition; antiquated land laws are the single most factor for tardy implementation of warehouses in India. Absence of a viable integrated multimodal logistics network to ensure cost effective efficient delivery is a major issue. Indian warehousing industry lacks cohesive tax and regulatory policies as the sector is yet not given Infrastructure status. Meanwhile, inadequate physical infrastructure to promote use of state-of-the-art technologies such as RFID, e-commerce capabilities, etc., also make this sector backward. Another challenge is lack of skilled manpower to take advantage of technology in inventory management and distribution dynamics.

Vinod Asthana
Warehousing roadblocks are caused by a variety of phenomena, from understaffed or poorly trained employees along with imp-roper dispersal of staff responsibilities to outdated technology and equipment and faulty communication.

Aditya Bafna
Lack of scientific handling and storage infrastructure (both dry and cold): As a result, a very high level of wastage at farmers´ dwelling places, during transportation, in the markets and in the warehouses (wastage as high as 40 per cent in some fruits and vegetables). In addition, we have another issue, markets have been dominated by middlemen  hence, a wide gap between the price realised by the farmer and the price paid by the ultimate consumer. Moreover, there is an absence of a well-developed warehouse receipt financing system. This factor, along with that inadequate post-harvest infrastructure, low level of processing/value addition and agricultural marketing and storage is also a worry factor for the industry.

Adarsh Hegde
In terms of challenges faced, the overall policy of multi-State level taxes, various approvals and paperwork required needs to be seamless and in sync with the economic objective of facilitating growth. There´s another thing that needs to be done. An useful exercise would be to move towards benchmarking international markets such as Singapore as well as Dubai. This move will be a more appropriate way forward to align and revise our procedures.

What are the proactive steps that the government should take?
Vikas Anand
Road infrastructure needs to be developed and while India is increasing outlays on ports and roads, with more tangible economic reforms, infrastructure development projects have a long gestation period. We welcome the changes and infrastructure upgrades that are taking place as this will benefit and facilitate our business services to our clients.

In India, logistics costs are very high compared to international standards owing to its underdeveloped infrastructure. Steps are being taken to improve the infrastructure, but the pace seems slower than the economic growth.

Acceleration of road network improvement and expansion would mean huge savings on fuel, greener environment, enhanced safety and better experience for customers. We welcome the changes and infrastructure upgrades that are taking place as this will benefit and facilitate our business services to our clients.

Ajay Kakra
Agri-warehousing in India has primarily been dominated by Government agencies. In this space, we find very little private presence. So I see and would like the Government to encourage private players to develop new warehousing facilities, which may be operated on a PPP model.

Adarsh Hegde
Actually, the market is already there in the country. What needs to be done is that the market needs to be stimulated to achieve its full potential. As our nation plans to increase its competitiveness globally, one of the variables that will assist in bringing in the required efficiency is warehousing at strategically located hubs across India. Connectivity to these locations via road, rail and well as coastal shipping will also play an important role to boost this sector´s growth.

Vinod Asthana
To enable customers in reducing cost and providing effective services, the use of Warehouse Management Systems (WMS). The basic objective of these systems is to help manage warehouse resources, and these tools are gaining importance. WMS uses advanced technology and operating processes for optimising all warehousing functions. These functions begin from receipts from suppliers and ending with shipments to customers.

WMS also includes all inventory movements and information flows in between.