Logistics and warehousing market with CAGR of 15.64% is projected to reach US$ 34.99 billion by 2027. Unprecedented growth in warehousing sector is supported by govt’s visionary initiatives such as PMGS and NLP boosting infra development, digital integration, standardisation and cost reduction.
Akash Tyagi
The Indian logistics and warehousing sector have emerged as the key growth driver for the country’s economy in the past five years. The warehousing demand has eclipsed supply by 40 per cent in the past five years, which speaks eloquent as to how the industrial and warehousing sector has been evolving in the country. The H1 2024 results in the warehousing sector demonstrates that the country is on the right path to achieve milestones in the sector in the next decade.
India’s Grade A warehousing leasing breached the 20 million square feet mark in the H1 2024 and is projected to reach up to 45 million square feet this year-end. The first half of 2024 saw an eight per cent surge in warehousing and logistics absorption, standing at 16.6 million square feet in comparison to the corresponding period in 2023. Mumbai, Pune and Bengaluru have contributed a larger chunk in the total absorption. It is the industry’s and government’s responsibility to expand the warehousing space in tier II and III cities to maximise overall productivity in the sector.
Govt initiatives such as PMGS and NLP are poised to position India as a premier global warehousing and logistics hub. These initiatives have transformed India’s logistics sector, by enhancing the multimodal linkage across India. This approach promises to enhance logistics efficiency, reduce transit times, and smoothen goods movement, especially valuable for industries such as cold chain logistics and warehousing that rely heavily on advanced infrastructure.
The PMGS wherein 16 Union ministries are involved includes various initiatives such as the government’s goal to establish 35 MMLPs, economic zones, promotion of free trading zones, and the upgradation of customs station in the warehousing and logistics sector.
NLP has been initiated to address issues such as higher costs and inefficiency in the sector through a strategic framework. This policy has been implemented to enhance economic growth, provide employment opportunities and promote Indian products in the global market.
The NLP aims to reduce the logistics cost from 16 per cent of GDP to 8 per cent by 2030. By promoting the adoption of technologies such as Internet of Things and Artificial Intelligence, the policy aims to enable real-time tracking of goods and streamline operations. Driven by these reforms, the sector is likely to attract investments of `1.5 trillion over the next five years.
The four major features of NLP involve Integration of Digital System, Unified Logistics Interface Platform, Ease of Logistics and System Improvement Group. The PMGS and NLP initiatives have boosted the warehousing sector and paved the way for consistent growth in the future with heavy investments in related infrastructure.
Therefore, interacted with industry leaders for their insights on the role of government’s initiatives in the upliftment of India’s industrial and warehousing sector.
Technology integration in logistics important
Vinet K Chadha, Founder & MD, Combined Logistics Solutions
PMGS will boost manufacturing costs such as electronics, renewable energy and pharma. The plan focuses on enhancing infra and logistics. By improving transportation networks—such as roads, railways, and ports—we can reduce logistics costs and delivery times, thereby making manufacturing sector more competitive. Businesses will have an attractive proposition to set up warehouses in India, positioning India as a global manufacturing hub. NLP can help reduce logistics costs, which currently account for a substantial percentage of GDP. Another focus is the integration of technology and digital solutions into logistics operations.”
Grade ‘A’ warehouses enter tier II & III cities
Chandranath Dey, India Head, Operations, Business Development, Industrial Consulting & Integrated Logistics, L&I, JLL
The NLP aims to provide a unified policy environment and an integrated mechanism for developing the sector. The policy aims to reduce logistics costs from 13 to 14 per cent of GDP to below 10 per cent. Modal transition from road to rail through DFCs projects has potential to achieve the same. It emphasises standardisation of physical assets in warehousing, leading Grade ‘A’ warehousing to penetrate into tier II and III cities. The policy promotes development of digitally compliant spaces with in-house command centres for improving efficiency in logistics. It also aims to ease funding access.”
Development of logistics infra urgently needed
Akash Singh, Partner, Kearney
India ranks 38th in the LPI, lower than USA (17th) and China (19th) due to poor logistics infrastructure. The average speed on NHs is 30 to 35 kmph compared to 90 kmph in the USA. Similarly, service levels in Railways are lower as infra is limited. To achieve the target of US$ 30 trillion GDP by 2047, the sector will need to grow four times in freight movement. Under PMGS, plans of infra development are being integrated using GIS-technology. They have planned to increase access-controlled highways to 50k km (12x), port capacity to 10k MTPA (4x), develop 21 greenfield airports, energy, mineral, cement railway corridors and 35 MMLPs for providing linkage to industrial nodes.”
PMGS, NLP boost last-mile delivery, cut costs
Aditi Kumar, Executive Director, TVS ILP
PMGS and NLP have made strides in altering the sector, creating a sustainable logistics network. PMGSs’ vision for advancing multimodal logistics networks—encompassing rail, road, ports, and air—has enabled businesses to improve last-mile delivery, reduce costs and make transportation affordable. The NLP’s focus on sustainable growth will help in reducing CO2 footprint, promote eco-friendly logistics, supporting broader environmental objectives. The policy stresses on digital transformation and enhances operational transparency, which will attract investors by consolidating approvals into a single window system.”
Road, rail options to make sector competitive
Sunil Nair, CEO, Snowman Logistics
The PMGS promises to enhance logistics efficiency, reduce transit times, and ease goods movement, valuable for industries such as cold chain logistics and warehousing. The NLP is focused on optimising operational processes within the sector. By simplifying laws, fostering industry-specific skill development, technology supporting a technology-driven ecosystem, the NLP aims to streamline logistics ops and make crucial data accessible for operators. Together, PMGS’s infra focus and the NLP’s process improvements provide a strategy to modernise India’s logistics sector.”
Creating transport ecosystem to cut costs
Vinay Patil, VP, Business and Development, KSH Integrated Logistics
The PMGS and the NLP are game changing initiatives that will elevate the efficiency and competitiveness of logistics sector. These initiatives align with KSH Logistics’ mission of creating end-to-end supply chain solutions. The PMGS focuses on creating a seamless transport ecosystem, that integrates road, rail, air, and waterways modes. This approach may decrease logistics costs, saving the industry `1.5 lakh crore annually. Improved linkage will reduce transit times by 20 to 30 per cent, allowing goods to reach their destinations faster and safely.”
PMGS, NLP to make India global trade force
Jinali Gandhi, Business Head, Global Growth & Expansion Gandhi Automations
The PMGS and the NLP are poised to position India as a premier global warehousing and logistics hub. By accelerating infra development, streamlining supply chains, and fostering an interconnected logistics ecosystem, these initiatives will make India a force in global trade. We see the government’s focus in aligning with the industry’s shift towards automated warehousing solutions. This alignment has driven a growth in demand for high-performance equipment, maximising efficiency, safety, and adaptability. India is surely on its way to become a global warehousing powerhouse.”
Infra overhaul possible through PMGS, NLP
Sandeep Chadha, Founder & CEO, Warehouster
The PMGS and the NLP represent a transformative approach, aiming to make India a global trade leader. PMGS, launched to streamline infra planning across ministries, integrates all key modes—road, rail, ports, and waterways—on a single digital platform, enhancing efficiency and connectivity. The plan has already improved planning for 27,000 km of railway tracks and 9,000 km of roads. This infrastructure overhaul reduces transit times and addresses costly bottlenecks, thereby providing faster delivery solutions. The NLP builds on this by driving efficiency, promoting digital innovation, and encouraging investment to optimise logistics.”
PMGS to set up unified logistical network
Arshdeep Mundi, Executive Director, Jujhar Group
Indian logistics sector may undergo change thanks to PMGS and NLP, which aims to catapult the sector in the global arena. PMGS seeks to link means of transportation and establish a unified logistical network. This will increase efficiency, shorten transit times, and cut logistical expenses. The NLP, on the other hand, aims to streamline operations, promote digitisation, and cultivate trained labour. These initiatives will lower logistics costs and reduce them to 8 per cent, in line with global standards. The emphasis on developing infra to save `2.4 trillion to `4.8 trillion in logistical expenses annually. For organisations, this means lower costs, supply chain visibility among others.”
