Post Date : November 10, 2021
Warehousing, an essential link in the logistics value chain, has always held great importance in the ‘little big state of India’, Punjab-which holds 1.5% area of the nation and produces about 2/3rd of its foodgrains. The state warehousing market, which until recently catered majorly to the food produce, has been on the cusp of transformation owing to increased demand from E-Commerce, FMCD, Manufacturing & Retail. In this feature, we track the warehousing market’s transition of the state with a spotlight on its two major warehousing markets Rajpura and Ludhiana.
The food bowl of India, Punjab has largely been an agricultural state and stands at second position at all Indian levels in terms of food grain production. With one of the oldest state warehousing corporations in the country established in the year 1958, called the Punjab State Warehousing Corporation (PSWC), the state largely warehoused agrarian produce and other commodities under the agricultural produce until not so long ago. However, it was over time and with increased modernization that the government understood the need for warehouses other than the ones catering to food grains and opened gates for warehousing facilities for non-agriculture purposes.
This decision met a long-pending demand of industrialists and traders for the establishment of warehouses to store different types of goods and commodities given their potential and demand and led to the emergence of two very prominent industrial bases of the state (Ludhiana and Rajpura) taking warehousing market of Punjab at the cusp of transformation.
Comprising the Punjab-Haryana border, the AmbalaRajpura warehousing market is dotted with many unorganized warehousing facilities and encompasses several locations in Punjab and Haryana in a triangle catering to many Tier-II cities in northern India.
As per the latest India Warehousing Report by Knight Frank Report, in FY 2021, the Ambala-Rajpura market accounted for nearly 0.11 mn sq m (1.2 mn sq ft) warehousing leasing, a 47% YoY decline over FY 2020. Almost all the warehouse space leased was in the Banur-Tepla cluster. The Banur-Tepla Road is a major thoroughfare in this market providing further connectivity to Zirakpur and other markets via the Ambala Bypass Road, making it a cynosure for the eyes of occupiers.
“Rajpura in Punjab is called the ‘Gateway to Punjab’ as it connects the state with several other states viz. Uttar Pradesh, Himachal Pradesh, J&K, and Haryana. A few regional players have set up Grade A warehouses in this belt as they realize the potential of this warehousing market to serve multiple cities in Punjab, Himachal Pradesh, and Jammu & Kashmir,” says Sandeep Chadha Founder & Managing Director, Warehouster Capital Advisors.
The scope for Grade A warehousing facilities to come up in the region is huge and is crucial to attract significant leasing by occupiers.
Historically known as the dominant industrial hub of Northern India, Ludhiana is Punjab’s largest city and a prominent industrial hub for small-scale goods.
Production of auto components, household appliances, hosiery, bicycle, hand tools, and industrial equipment has made the city a key sourcing partner for companies in the FMCD, auto, and manufacturing sectors.
It is a key Tier II city for the warehousing Market with its connectivity to other cities in Punjab and neighboring states via the National Highway NH 5, NH 44, and State Highway 11 (SH 11).
As per the Report, In FY 2021, Ludhiana clocked nearly 0.04 mn sq m (0.5 mn sq ft) warehousing leasing, a healthy 31% YoY upswing over FY 2020. Of the total warehouse leasing transaction volume, 68% was concentrated in the NH 44 cluster (Old NH 1), while 32% was in the Chandigarh Road cluster.
While the city mostly has unorganized warehousing stock, investors and developers are keenly looking into the organized warehousing opportunities that the city has to offer.
The credit for making Punjab a much sought-after market for establishing warehousing footprint can be largely given to the strategical location and well connectivity of the landlocked state.
Punjab has huge and strategically placed parcels. Road & Rail connectivity is there. Punjab is uniquely placed and connected to major North Indian cities via a well-laid road network, says Chadha while speaking of the spurred-up warehousing activity in the state.
With a proximity of 150 miles from the national capital, Punjab is well connected to all major metro cities. It has a connection to freight corridor for easy movement of goods by road, it houses 4 domestic airports at Jalandhar, Ludhiana, Bathinda and Pathankot along with 3 international airports namely Amritsar International Airport, Mohali International Airport and Chandigarh International Airport with another coming up in Ludhiana in March 2022- enabling air cargo movement, and 2nd largest rail density in India.
Furthermore, ranked 1st in Safety & Security of Cargo Movement and 2nd in ease of logistics in India, the state has 5 ICDs and 3 Multimodal Logistics Parks in Ludhiana operated by Adani Logistics Ltd., Hind Terminal Pvt. Ltd. (Sharaf Group, UAE) and Punjab Logistics Infrastructure Ltd (PLIL) making it an attractive state to invest and do business in.
Being a relatively richer state, there is, by large, better availability of disposable income and a highly captive market, so to say. Another positive factor is the presence of law and order in the state, which gives an assurance of safety to the businessmen, he adds.
The Punjab state government, along with the Centre, has understood the importance of the warehousing sector and has made several efforts to upgrade the infrastructure. This has helped attract more investors, which in turn has acted as a stimulant for warehousing activity in the state.
“The Punjab government is envisioning for it to become a focal point for industries. Some of the infrastructure-specific projects have already been underway. And a little more thrust on infrastructure and ease of doing business will catapult Punjab right to the top of charts in India’s Warehousing realm,” Mr Chadha says while acknowledging the efforts of the state.
This article was originally published in the November Edition of Logistics Insider Magazine. To read the complete article, click here.