Welspun One Logistics Parks is in advanced stages of closing several deals to take up warehouses in Chennai, Bengaluru, Delhi and other locations in the country.
The logistics firm, which had outlined plans to invest ₹900 crore in a warehouse facility at Bhiwandi in Mumbai, which will eventually have over 3.2 million square feet of built-up warehouse space, expects to add a few more warehouses by the end of next year.
“The company expects the country’s warehouse space to gradually transition into a modern network where warehouses no longer are merely storehouse spaces but have become mini factories,” said Anshul Singhal, Managing Director of Welspun One Logistics Parks said.
According to Singhal, a lot is going right for the rapidly-expanding warehouse sector in the country, which added about 40 mn sq ft of space last year, and has attracted investment commitments of over $5 billion. It was slightly behind the office space addition last year showing momentum in this space.
“In South India, we are particularly focused now on growing the Bengaluru and Chennai markets, following this up with Hyderabad. We are looking to expand organically by acquiring land and developing warehouses while also scouting for potential inorganic approach, which could lead to some acquisitions,” he said.
“We are looking at taking the total warehouse capacity to over 10 mn sq ft within four-five years. As we talk, we are in advanced stages of finalising land transactions in some of the major metros of the country. We also see the emergence of some Tier II cities as warehouse hubs,” he explained.
The implementation of GST in 2017 has been a turning point for the country’s warehouse sector, where the focus now is on building Grade A warehouses rather than looking at merely having storage spaces which were seen as godowns. “Earlier, the model was simple, where we have had storage spaces in each State and goods were moved from one destination to another. Now, it is different with the growth of e-commerce in the country,” he said.
E-commerce has scripted a new approach where people want goods delivered in days and at some locations within hours, he pointed out. This will also lead to smaller warehouses coming up within cities to service local requirements, he said.
“Alongside the growth of warehouse spaces in the larger metros, and their peripheral areas, we also visualise a situation where there will be big growth of warehouses in Tier II cities. Cities like Indore, Pune, Coimbatore, Vizag, and Thiruvnanthapuram, among a host of others, will see the setting up of warehouses to serve the local markets,” he explained.
The sector, which is a major employment creator, has huge potential to attract investments, he said.
“Globally, warehouse business is seen as a clean and sustainable business that attracts huge investments. The Government and the RBI have cleared all the hurdles for attracting FDI in warehousing business. Now, 100 per cent FDI is allowed in the warehousing sector, and warehousing has been accorded industry status; these augur well for the growth of the sector,” he said.