Geography will matter in a big way going ahead in terms of shaping warehousing landscape in India. The changing physical dimensions of a country and its interaction with the rest of the world define the changing nature of production distribution and consumption.
For long, warehouses in India have been designed to suit businesses to become tax efficient. It is high time that we make our warehouses business efficient. GST has paved the way for businesses to rationalize their warehousing structures, design, and help minimize logistics cost and become business efficient.
“The need of the day is for businesses to understand the underlying geographical as well as developmental trends in order to build warehouses of tomorrow. Rise of small towns and rural non-agricultural employment around these towns, development of physical infrastructure under Bharatmala project as well as maritime infrastructures under Sagarmala are all defining physical geography of development.”
These new landscape changes will necessitate a structural change in warehousing location, structure and design.
Contours of urban India are changing and moving beyond metros to Tier II to Tier IV cities. The birth of these new cities will result in more Indians living in cities. According to an estimate, around 500 million Indians will be in cities by 2025. Tier II-IV towns are numbered at 600.
A Report by Ernst & Young titled ‘India’s Growth Paradigm – How Markets beyond Metros Have Transformed’ looks at 50 cities that make the cut as business centres. Apart from 8 metros (Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata, Ahmedabad, Pune), it recognizes 42 ‘new wave’ cities – of these, there are two new metros – Jaipur and Surat, followed by 10 high potential cities and 30 emerging markets.
A recent study by the World Bank finds small towns have contributed significantly more in generating non-farm employment as compared to large cities. These centres of consumption will fore a redesign as well as growth strategy on the part of logistics and warehousing players.
Bharatmala Yojna is another game changer and is a stepping-stone towards new India. This is going to optimize the movement of goods and services across the country. Bharatmala will change the landscape of highway connectivity. The first phase will help increase highway network. The project will increase the number of corridors from six today to 50. The movement of freight on highways will increase from 40 per cent to 55 per cent. The number of districts connected with highways will increase from 330 to 500.
The first phase of the Bharatmala project will help increase the number of corridors; inter corridor and feeder roads, National corridor efficiency improvement roads, coastal, and border connectivity roads and expressways etc. 34,800 roads will be taken up in the first phase.
An important and significant part of this development is these corridors are strategically and scientifically identified and are linked to the creation of production and distribution clusters along with well-designed development of the multimodal parks. 25 logistics park will be on corridors and will cater to 50 per cent of road freight.
Multimodal Logistics Park will also cater to intermodal freight movement and an effort by the government to increase the share of rail in the movement of goods.
Sagarmala will supplement Bharatmala. Sagarmala is an initiative floated by the Government of India to evolve a model of port-led development which will transform India’s coastline as gateways of India’s prosperity.
The projects under Coastal Berth Scheme of the flagship Sagarmala Programme are distributed over eight states with the highest number of projects in Maharashtra (12 projects), Andhra Pradesh & Goa (10 projects), Karnataka (6 projects), Kerala and Tamil Nadu (3 projects), Gujarat (2 projects) and West Bengal (1 project).
Sagarmala also will develop waterways along the major rivers in India. The riverways from Varanasi to Sahebganj has already taken off. They two are linked to production and distribution clusters as well as multimodal logistics parks. This will help Indian businesses connect to East Asia and the Asia Pacific on one hand and Africa, West Asia and Europe on the other hand.
These geographical shifts, along with changing dimensions of physical infrastructure will help business cut their logistics cost internally as well as reaching the unreachable northeast along with East Asia. The landlocked SAARC nations will also be able to do more business among themselves as well as use these infrastructures to generate more trade with the rest of the country. Logistics and 3PL firms will have to design their facilities taking into consideration the future reality of Indian economic geography.
