Medilytix bureau: The government’s National Logistics Policy, aimed at facilitating a unified regulatory environment and institutional framework governing the sector, is expected to help the property sector capitalise on the exponential growth of commercial real estate, including warehousing and industrial parks, across both established and emerging logistics markets.
The policy, unveiled on Saturday by Prime Minister Narendra Modi, will provide a framework for the establishment of Multi-Modal Logistics Parks (MMLPs) in key markets while ensuring multi-modality and addressing first and last-mile connectivity at a faster pace.
The new policy, first introduced in the Budget 2020 speech by Finance Minister Nirmala Sitharaman, is aimed at bringing in an integrated and tech-enabled approach to logistics operations to bridge the efficiency gap. This is also expected to help attract investment, which is also on the rise, into the sector.
“This is a step in the right direction to drive economic growth at an accelerated pace with improved time and cost efficiencies. The progressive roadmap to accomplish seamless last mile connectivity with an integrated platform and approach will scale up India’s global manufacturing hub proposition globally. The policy will give thrust to the manufacturing, MSME, infrastructure, and real estate sectors to generate much needed employment and investment, “said Niranjan Hiranandani, National Vice Chairman, NAREDCO.
According to him, inter-ministerial collaboration is a shot in the arm to increase the ease of doing business. The multi-modal logistics corridor under the PM Gati Shakti national master plan will reduce logistics costs to GDP by nearly 8%, making India globally competitive.
Realty developers expect the new policy to help increase the pace of growth in the warehousing segment further with the integration of supply chains.
“The much-needed National Logistics Policy is in line with the PM Gati Shakti plan in 2021. This will not only help ease the process of doing business but will also help India match global standards in terms of logistics. “The warehousing sector will benefit through the integration of local supply chains with international supply chains,” said Anshul Singhal, MD, Welspun One Logistics Parks.
Along with the Gatishakti National Master Plan launched in October 2021, the new logistic policy is expected to pave the way for multimodal connectivity and also help attract more investment into this segment.
“The logistics industry, particularly warehousing, benefited from the introduction of GST, which was a game changer in many respects. We are sure that these positive measures by the government will pave the way for more investments in this industry. We welcome the new policy, formulated by the government, and hope this acts as an engine of growth in India’s march towards a $5 trillion economy, “said Amrutesh Reddy, MD, NDR Warehousing.
According to Singhal, the new policy is also a step in the right direction in terms of addressing the employment of the skilled and semi-skilled in India. It will give a vital impetus to India’s logistics and warehousing sector in terms of the creation of world-class infrastructure facilities, an E-handbook for warehousing standards, digitalisation and other new-era technology uses, promotion of multi-modal transport, etc.
While unveiling the policy, Prime Minister Modi added that new eco-friendly waterways are being set up; 40 air cargo terminals have been set up to facilitate exports; 30 airports have cold storage facilities; and 35 multi-modal logistics facilities are being set up to ensure better logistics infrastructure across the country.
Industry experts say the proposed digitisation is a step to induce transparency and smooth execution.
In India, a favourable regulatory environment, along with the government’s support through policy and reforms, has started to boost spending on infrastructure and, in turn, the overall demand for modern warehousing.
The warehousing sector is expected to record the highest ever absorption of warehousing this year due to the aggressive expansion of e-commerce and the growth of third-party logistics (3PL) companies.
In 2021 itself, the net absorption of warehousing space rose to 39.2 million sq ft, surpassing not only 2020’s absorption level of 22.1 million sq ft but also the 36.3 million sq ft registered in the pre-pandemic year of 2019. And the current pipeline of impending transactions is projected to drive net absorption of 42.5 million sq ft in 2022, according to data from JLL India.
Indian warehousing has been attracting interest from institutional investors, with more than $5 billion of funds being committed by private equity firms and pension funds such as CPPIB, Warburg Pincus, and Ivanhoe Cambridge over the past five years.