Riding the wave of India’s logistics and warehousing sector with Aloke Bhuniya, CEO, India Logistics, Ascendas-Firstspace

Driven by rising demand from sectors like e-commerce, automotive, and fast-moving consumer goods (FMCG), India’s logistics and warehousing space is expected to hit 1.2 billion sq ft by 2027, with Grade A warehousing leading the shift towards quality, growing from 290 million sq ft in 2023 to 400 million sq ft. The latest quick-commerce boom has been a significant catalyst, necessitating agile and modern logistics solutions to cater to changing consumer expectations.

Aloke Bhuniya , CEO of India Logistics, Ascendas-Firstspace shares insights on the burgeoning growth of the logistics and warehouse sector in India. He discusses key trends, challenges, and opportunities within the industry, highlighting the factors driving its expansion and the strategic initiatives being undertaken to capitalise on this growth.

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Current trends in the logistics and warehousing market in India

One of the most prominent trends is the surge in online shopping, which has fuelled unprecedented growth in e-commerce. This has created a heightened demand for efficient logistics and warehousing services, as consumers increasingly prioritise speed and convenience. Streamlined logistics operations are crucial for ensuring timely deliveries and meeting these evolving demands.

Data-driven decision-making is another key trend shaping the industry. Utilising robust data analytics capabilities is now essential for informed decision-making, optimising routes, and enhancing overall operational efficiency. For example, real-time tracking of products optimises inventory management, while data analysis helps design optimal warehouse layouts, minimising search and packing time.

Furthermore, the adoption of green logistics technologies is gaining momentum. Climate measurement tools, electric vehicles, and sustainable cold chain solutions are being embraced for their environmental benefits and cost-saving potential, paving the way for renewable energy solutions and contributing to India’s goal of achieving net-zero carbon emissions by 2070.

These trends collectively highlight the transformative impact of technological advancements and changing consumer demands on the logistics and warehousing landscape in India. As businesses adapt to these shifts, innovation and agility will be key to success in this rapidly evolving industry.

Key factors driving the growth of logistics and warehousing

One of the primary drivers is the government’s commitment to strengthening the sector through initiatives like the Logistics Efficiency Enhancement Programme and the development of dedicated rail-based freight corridors. These measures are creating a more conducive environment for growth and enhancing the sector’s potential.

Additionally, the combination of evolving consumer behaviours, technological advancements, and supportive government policies is fostering continued expansion and innovation. As businesses strive to meet the demands of a dynamic market, the logistics and warehousing sector is set to play an increasingly pivotal role in shaping India's economic landscape.

Investor sentiment remains highly positive, with both domestic and international investors actively seeking opportunities in this thriving market. The sector's potential for strong returns, driven by increasing demand and consistent rental yields, has made it a magnet for investment. As a result, the warehousing sector is poised to significantly contribute to India's economic growth by transforming the logistics landscape and supporting the expansion of various industries.

Key modernisations and innovations

Warehousing facilities are being revolutionised by cutting-edge technology to boost efficiency and productivity.

Robotic picking systems are now employed to quickly and accurately locate and pick items, minimising human error and speeding up order fulfilment.

Autonomous vehicles are also transforming warehouse operations, working tirelessly to move inventory around the clock. These self-driving machines, equipped with sensors and AI analytics, ensure seamless movement of stock, enhancing productivity and safety.

Robotic Process Automation (RPA) is streamlining repetitive tasks like data entry and invoice processing, freeing up employees to focus on more complex and strategic initiatives. This not only improves efficiency but also boosts job satisfaction.

Utilisation of robotics and drone technology addresses the growing need for complex supply chain operations, e-commerce fulfilment services, and advanced warehouse management solutions. Drones are becoming indispensable for various logistical needs, including surveillance, access to remote areas, urgent deliveries, and reverse logistics.

The integration of automation, data analytics, and digital tools across the logistics value chain is optimising operations,?leading to improved performance and streamlined processes.

These advancements are reshaping the warehousing landscape, enabling businesses to adapt to the evolving demands of the market while achieving greater efficiency and productivity.

Major warehousing infrastructure contributions by Ascendas-Firstspace

The Ascendas Firstspace platform was set up as a joint venture between CapitaLand Investment (previously known as Ascendas ) and industrial real estate company Firstspace Realty to establish a robust network of industrial and logistics parks in strategic locations across India like Chennai, Bangalore, Mumbai Metropolitan Region (Bhiwandi), New Delhi – National Capital Region and Kolkata.

Ascendas-Firstspace has allocated substantial capital for initial investments and plans to develop a total of 25 million sq ft within the?next five to six years across diverse asset classes, including IT parks and industrial parks. In addition, CapitaLand Investment continues to expand its portfolio with forward purchase agreements for industrial assets and development of data centres through CapitaLand India Trust.

We are committed to developing a strong network of logistics and industrial parks in key logistics nodes and manufacturing clusters throughout India. We aim to be a reliable partner, continuously enhancing our infrastructure to support the evolving needs of our clients.

Key challenges faced by industry players

The warehousing sector in India is on an upward trajectory. From 2021 to 2023, there was a 6% annual increase in rental rates, driven in part by rising land costs. Thus, expanding warehousing footprint through strategic land acquisition in key logistics hubs and industrial corridors calls for balancing proximity to demand centres with affordability. This has prompted some warehouses to move further from urban areas. The scarcity of suitable plots, especially in prime locations, heightens competition and drives up acquisition costs. Businesses are faced with the choice of making significant investments in land or opting for smaller, multi-storey facilities to optimise space utilisation.

The government’s proactive promotion of industrial zones and logistics parks to address land cost issues and support the sustainable growth of the warehousing industry has helped alleviate the situation.

Other challenges include the intense market competition arising from the need to develop modern warehouses and provide customised solutions for different industries.

Given these challenges, it is essential to partner experienced operators like CapitaLand Investment through Ascendas-Firstspace, who bring capabilities across investment, development and operations. The right partner, equipped with local market knowledge and a strong network, can help businesses navigate these complexities effectively.

The future of India's logistics and warehousing sector

The future of India's logistics and warehousing sector looks promising, supported by several government initiatives and technological advancements. The Indian government has been proactive in addressing logistics challenges by establishing multi-modal logistics parks, aggregation and disaggregation centres, and state-of-the-art warehousing facilities. The PM Gati Shakti programme, a national master plan aimed at coordinated execution of infrastructure connectivity, is pivotal in enhancing roads, railways, ports, and airways, focusing on creating a congestion-free logistics infrastructure. Additionally, regulatory measures like the Goods and Services Tax Act, National Logistics Policy, and warehouse standardisation have significantly bolstered the sector.