Understanding the key challenges of Indian warehouse Industry
Indian economy decides the growth of warehouse industry in our country. There are ample of opportunities in the Indian market and the landscape is also suited to start any new project. Besides this, there are several challenges associated with this field .
The Indian market lacks international warehousing standards. Challenges related to the implementation of strategies are also there. Indian warehouse developers face several bottlenecks and impediments when it comes to bringing their ideas to life.
The growth of the warehouse industry in India depends on how effectively industry players and government can work together to address various challenges that they face. Some of the key challenges that the warehouse industry face is:
1.Infrastructure: It is the building block of the warehouse industry. An efficient warehouse setup depends on high-quality infrastructure with good national highway roads, and congestion free network. Currently, the Indian warehouse industry is fragmented and unorganized. It is largely dominated by small players in the industry who are not well-linked with roads and national highways.
2.Availability: Land procurement is important for devising future strategies. The most common problem that most new entrants in this industry face are the challenges related to getting approvals and clearing the titles. Government policies usually intervene through various initiatives and there is a lack of clear land classification. One of the major concerns is a reclassification of warehouse zones. The land values have peaked many times in the last five years. Availability of land at affordable prices is not that easy. The values have escalated several times in past few years that have raised major concerns for developers in past few years. Not just that, different rules have different rules regarding land acquisition that have put serious cost and time implications lately.
3.Standardization: Flexibility and quality management are one of the key challenges of Indian warehouse industry. Lack of standards and accreditation is a major challenge for most developers. In cases of ready-to-occupy warehouses, investors need to invest much more to upgrade the standards, operations, and space. Demand from occupiers to adopt policies and standards puts further pressure on developers and owners. For instance warehouse space in Pune is not that easy to access. It is difficult to upgrade them in terms of technology and fit automated equipment into it.
4.High credit: It is one of the most critical issues in the warehouse industry and very difficult to access. This particular sector is seen as a high-risk zone by most of the banks due its unorganized nature and high transactions for loan appraisals. Banks usually deny loan to investors in this sector because they are usually small or medium scale entrepreneurs.
5.Unorganized players and fragmented market: The Indian warehouse industry is largely dominated by small scale capacities. The Supply chain in India is driven by consolidation. In many other countries, chain service providers usually have big fleet sizes and state-of-the-art technology. The scenario is quite different India as they do not encourage fleet ownership. Cold chain supply is largely prohibited all over the country as well.
6.Power outage: This particular issue cause huge wastage of agri-products in India. Power outage plagues almost all cold chains in our country. Increased power costs further triggers the problems in the Indian warehouse industry.
7.Long transit time: long transit time usually lead to increased costs. Inadequate infrastructure also increases the transportation costs and other expenses. The purpose of augmentation and distribution is defeated because material collected in small scale warehouses are distributed across the country.
8.Complex tax system: Most of the developed countries have a national-level centralized distribution center or hubs. This is not possible in India because GST implementation and complex sales discourage such kind of establishment.
9.Lack of expertise: The leading warehouse players in India lack basic amenities like storing, handling and monitoring. Besides that they also suffer from damages, stock issues and high pilferages.
10.Process inefficiency: Indian warehouses lack standard operating places and procedures. Processes like handling, storing, and loading is done in a very ad-hoc manner. This lead to several damages and fuels inefficiency in the entire process.
Although the Indian warehouse market face several challenges but it also holds many opportunities as well. Global investors are eyeing on India to make huge investments as it is a land of opportunities.
The Indian market lacks international warehousing standards. Challenges related to the implementation of strategies are also there. Indian warehouse developers face several bottlenecks and impediments when it comes to bringing their ideas to life.
The growth of the warehouse industry in India depends on how effectively industry players and government can work together to address various challenges that they face. Some of the key challenges that the warehouse industry face is:
1.Infrastructure: It is the building block of the warehouse industry. An efficient warehouse setup depends on high-quality infrastructure with good national highway roads, and congestion free network. Currently, the Indian warehouse industry is fragmented and unorganized. It is largely dominated by small players in the industry who are not well-linked with roads and national highways.
2.Availability: Land procurement is important for devising future strategies. The most common problem that most new entrants in this industry face are the challenges related to getting approvals and clearing the titles. Government policies usually intervene through various initiatives and there is a lack of clear land classification. One of the major concerns is a reclassification of warehouse zones. The land values have peaked many times in the last five years. Availability of land at affordable prices is not that easy. The values have escalated several times in past few years that have raised major concerns for developers in past few years. Not just that, different rules have different rules regarding land acquisition that have put serious cost and time implications lately.
3.Standardization: Flexibility and quality management are one of the key challenges of Indian warehouse industry. Lack of standards and accreditation is a major challenge for most developers. In cases of ready-to-occupy warehouses, investors need to invest much more to upgrade the standards, operations, and space. Demand from occupiers to adopt policies and standards puts further pressure on developers and owners. For instance warehouse space in Pune is not that easy to access. It is difficult to upgrade them in terms of technology and fit automated equipment into it.
4.High credit: It is one of the most critical issues in the warehouse industry and very difficult to access. This particular sector is seen as a high-risk zone by most of the banks due its unorganized nature and high transactions for loan appraisals. Banks usually deny loan to investors in this sector because they are usually small or medium scale entrepreneurs.
5.Unorganized players and fragmented market: The Indian warehouse industry is largely dominated by small scale capacities. The Supply chain in India is driven by consolidation. In many other countries, chain service providers usually have big fleet sizes and state-of-the-art technology. The scenario is quite different India as they do not encourage fleet ownership. Cold chain supply is largely prohibited all over the country as well.
6.Power outage: This particular issue cause huge wastage of agri-products in India. Power outage plagues almost all cold chains in our country. Increased power costs further triggers the problems in the Indian warehouse industry.
7.Long transit time: long transit time usually lead to increased costs. Inadequate infrastructure also increases the transportation costs and other expenses. The purpose of augmentation and distribution is defeated because material collected in small scale warehouses are distributed across the country.
8.Complex tax system: Most of the developed countries have a national-level centralized distribution center or hubs. This is not possible in India because GST implementation and complex sales discourage such kind of establishment.
9.Lack of expertise: The leading warehouse players in India lack basic amenities like storing, handling and monitoring. Besides that they also suffer from damages, stock issues and high pilferages.
10.Process inefficiency: Indian warehouses lack standard operating places and procedures. Processes like handling, storing, and loading is done in a very ad-hoc manner. This lead to several damages and fuels inefficiency in the entire process.
Although the Indian warehouse market face several challenges but it also holds many opportunities as well. Global investors are eyeing on India to make huge investments as it is a land of opportunities.
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