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India to attract warehousing demand from firms with ‘China Plus One’ strategy

While big industrial and logistics developers are boosting their presence in Chennai, Bengaluru is seeing new warehousing demand. Photo: Ramesh Pathania/MintPremium
While big industrial and logistics developers are boosting their presence in Chennai, Bengaluru is seeing new warehousing demand. Photo: Ramesh Pathania/Mint

  • The growth of e-commerce fuelled by covid-19 crisis has led to the spurt in demand for warehouse infrastructure and the companies, today, focus on flexible and resilient supply chain to enable timely delivery/access to customer, said Colliers

India is well-poised to attract global manufacturing demand and has a unique advantage of a diverse talent pool and huge local market, making it a go-to-destination for companies that are evaluating the China-plus-one strategy, property advisory Colliers said its new report ‘Asia Pacific Industrial & Logistics Property’.

“The growth of e-commerce fuelled by covid-19 crisis has also led to the spurt in demand for warehouse infrastructure and the companies, today, focus on flexible and resilient supply chain to enable timely delivery/access to customer. Also, the need to be proximate to customer and to enable quick delivery timelines there is a laser focus on augmenting last mile delivery infrastructure," said Shyam Arumugam, senior director and head, industrial & logistics services (India) at Colliers.

Developers continue to add more supply this year and next to cater to growing e-commerce demand across India including major Tier II cities which are now becoming the focus, Arumugam said.

As companies based in China look to expand their operations outside in so-called China Plus One strategies, Ho Chi Minh City, Jakarta, Bengaluru and Delhi-NCR are emerging as attractive manufacturing destinations, the report said.

Mumbai and Pune are key industrial hubs, wherein Pune is seeing expansion by automotive groups, engineering, FMCG, third party logistics (3PL) and e-commerce.

Anticipating high growth, developers are also acquiring land parcels to develop industrial parks in Pune, along with Chennai, where several global auto majors are present and Bengaluru, the commercial centre of the south.

While big industrial and logistics developers are boosting their presence in Chennai, Bengaluru is seeing new warehousing demand.

Between 2019-2024, online grocery sales in APAC is expected to grow 30% per annum, driving demand for the last mile delivery facilities of logistics networks. Alongside, demand for cold chain facilities is also surging.

Occupiers can work with 3PLs to find the right solution to fit their needs, while investors can refit existing assets or build dedicated warehouses as a long-run option. E commerce majors and 3PLs drive demand in Bengaluru while Chennai is seeing growth in renewables and electronics, Colliers said.

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