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I N D I A R E P O RT
LOGISTICS INDUSTRY
REAL ESTATE'S NEW POWER HOUSE
INDIA LOGISTICS INDUSTRY - REAL ESTATE'S NEW POWER HOUSE
R E P O RT

A RESEARCH PUBLICATION

CONTENTS

1 Executive Summary 9 Indian Logistics Industry - A


Regional Perspective
3 Introduction
Logistics on a high growth trajectory 10 Location Attractiveness Analysis
6 Emerging Trends in Logistics 12 Key Locations for the Logistics
Industry Sector
Growth within the organised sector Kolkata, Mumbai, Hyderabad, Chennai,
Emerging concept of third party logistics Nagpur,Vizag, Gurgaon, Bangalore Indore,
Alwar and Kochi
Rapid growth of the warehousing sector
Logistics parks - One-stop shop for logistics 23 Steps to Streamline the Logistics
needs Industry
23 Conclusion

EXECUTIVE SUMMARY
The Indian economy has witnessed fast-paced supply and prolonged outages also meant low
growth over the last decade, making it one of dependence on technology. India's archaic
the preferred investment destination for warehousing system was detrimental to the
multinational corporations and a recognised growth of almost all sectors, especially sectors
manufacturing hub to the world. This, in turn, has like food and food-processing that requires
resulted in increased demand for world-class modern warehouses and investments in cold
logistics and warehousing services in India, chains and allied machinery.
leading to the growth and transformation of this
With increasing demand (from both MNCs and
sector. The logistics sector has been growing at
Indian companies) and growing requirements, the
an impressive rate of 8 to 10 per cent per
Indian logistics industry has expanded its
annum since 2002 to touch revenues of $100
bouquet of services to now include warehouse-
billion in 2007 - 081. The World Bank's 2007
related activities as well. Interestingly, the role of
Global Logistics Report ranks India 39th amongst a warehouse too has transformed – from a
150 countries in terms of logistics performance traditional storehouse to a place where the
during the year as well as its future potential. inventory is efficiently managed, with greater
Further, the Indian logistics industry is expected emphasis being laid on value-added services, such
to grow annually at the rate of 15 to 20 per as packaging, labelling, bar coding and reverse
cent, reaching revenues of approximately logistics.
US$ 385 billion by 2015. The accelerated growth
of the logistics industry, coupled with an All these factors have led to the rapid growth of
increasing trend to outsource warehousing the organised warehousing industry in India.
activities, has made India a vast and untapped Growing at the rate of 35 to 40 per cent per
market. annum, the warehousing industry is capturing the
imagination of various logistics players, both
For most domestic players logistics has for long domestic as well as international. Warehousing
been restricted to the basic transportation of activities account for about 20 per cent of the
goods. Traditionally, warehousing – which is an total Indian logistics industry2 and offer
important constituent of the logistics sector – tremendous growth potential. This market
has been dominated by small players with low segment is estimated to grow from US$ 20
capacities and poor deploying, handling, stacking billion in 2007-08 to about US$ 55 billion by
and monitoring technologies. Erratic power 2010-113.
1. ICICI Direct report on Transport Corporation of India
2. ET Knowledge Series 2002
3. Report on ‘Skill Gaps in Indian Logistics Industry’ by KPMG
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Over the next five years, approximately 110 projects and modernisation of over 37
logistics parks and 45 million square feet of operational airports will increase India's handling
warehousing space is expected to be developed capacities, thereby enhancing logistical
across the country by various logistics performances.
companies. This upsurge in the logistics and
This report identifies the key growth drivers for
warehousing industry will in turn boost real
India's logistics sector – such as increase in
estate activities in key locations across the
foreign trade, outsourcing of manufacturing
country.
activities and the emergence of organised retail –
While the India logistics sector holds that are necessitating the growth of warehousing,
tremendous potential, it forms a very small supply chain management, cold-storage and
portion of the total global market for logistics at transportation. This study has also undertaken a
Logistics cost in approximately 2 per cent of the estimated US$ SWOT analysis of various modes of freight
India is fairly high 5,000 billion global logistics industry. transportation – viz. roadways, railways, ports,
- at around 13% waterways and airways.
of GDP, which is Despite the impressive growth rates, the
much higher than logistics sector in India is fraught with many The findings of this report suggest that logistics
that in USA (9%), inefficiencies. Logistics cost in India is fairly high and warehousing activities are heavily
Europe(10%) and – at around 13 per cent of GDP, which is much concentrated in western India. However, the
Japan (11%). higher than that in USA (9%), Europe (10 %) and report also highlights the fact that logistics
Japan (11%). According to a recent report by activities are fast spreading to other parts of the
FICCI-Ernst & Young (E&Y), the average time country, and more importantly to tier-2 and
taken to clear import and export cargo at ports tier-3 cities. The report's location attractiveness
is about 19 days in India, against three to four analysis is aimed at identifying established as well
days in Singapore. As compared to the European as upcoming centres for this sector. These
countries, rail transportation in India is almost centres have a direct bearing on the concomitant
3.5 times more expensive and the average real estate developments in and around such
transit time by road is three times higher. These locations.
inefficiencies of the Indian logistics industry can
Case studies on established logistics hubs in
be attributed to factors such as a complicated
India, like Mumbai and Kolkata, along with similar
tax regime, fragmented market structure and
studies on tier-2 and tier-3 cities where logistics
inadequate infrastructure.
activities are gathering pace – such as Nagpur,
While there are several factors that go against Indore,Vizag and Kochi – are aimed at providing
India's logistics industry, however there are many a better understanding of how the sector is
growth drivers that suggest its rapid transforming.
transformation. While India lags behind major
Today, the biggest challenge before the logistics
global logistics hubs like Singapore, Germany and
industry is to increase efficiencies and become
Japan, factors like the changing tax regime,
more cost-effective, thereby increasing India's
increasing trade and the emergence of organised
overall cost arbitrage. The report also examines
retail will lead to accelerated growth in the
steps that can help India achieve that increased
sector over the next five to seven years.
efficiency and ensure a more balanced and
Infrastructure developments like the railway-
planned growth of the logistics sector.
dedicated freight corridors, road development
1. Global logistics industry report by Global Coalition for Effective
Logistic

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INTRODUCTION segments such as automobile, pharmaceutical,


fast moving consumer goods (FMCG) and the
Logistics on a high growth trajectory
emergence of organised retail. With escalating
The Indian logistics sector grew by 8 to 10 per competition and cost pressures, companies are
cent annually between 2002 and 2007. Several increasingly focusing on their core competencies
factors have favourably impacted the growth of by outsourcing their logistics requirements to
the logistics industry, like the country's changing third party logistics (3PL) players.
tax regime, growth across major industry

Sustained performance by major industry segments and emergence of


organized retail will lead to growth of Indian logistics industry

India will emerge as Performance of Major Industry Impact on Logistic


Segments Industry
one of the global
20
'manufactured
500 20
product'
16
outsourcing hubs 400
% Growth

16
and reach revenues 12
US$ Billion

% Growth
300
of approximately 12
8
US$ 50 billion 200
385

by 2015. 8
4
100 155
2005 2006 2007 2008 E 2009 E 2010 E 100
65
GDP Pharma 0 4
Retail Consumer Durables 2002 2007 2010 2015

Source: Cushman & Wakefield Research

The future of the Indian logistics and warehousing exports and 17 per cent in imports. India's
industry is currently governed by three key factors: current share in global trade is around 0.8 per
cent and is expected to increase to 1.6 per cent
a) Burgeoning domestic demand
by 2012. Robust growth in foreign trade will
Emergence of organised retail: Globally, increase the demand for good quality and timely
retail has been a key growth driver for the logistics and warehouse services.
logistics industry and India is no exception to
India becoming a manufacturing hub: The
this phenomenon. Organised retail in India has
world over, India is being recognised as a
been growing at over 30 per cent year-on-year.
destination for outsourcing of custom-based,
The total retail industry in India is expected to
high-technology manufacturing activities.
grow from US$ 320 billion1 in 2006 to US$ 421
According to Confederation of Indian Industries
billion by 2010.
(CII), India will emerge as one of the global
The growth of organised retail has created 'manufactured product' outsourcing hubs and
demand for specialised logistics services, wherein reach revenues of approximately US$ 50 billion
every retailer relies on strong logistics and by 2015. In order to remain cost-competitive,
warehousing infrastructure for the success of its contract manufacturers will be required to
business. This changing business environment provide integrated logistics solutions that will
should give further impetus to the logistics sector bolster the cost savings potential of the
by generating increased demand for high-quality outsourcing initiative. The increasing trend of
and efficient logistics and warehousing services. outsourcing will, in turn, drive strong demand for
logistics solutions in the country.
Increase in foreign trade: In 2007, the Indian
economy witnessed a growth of 13 per cent in 1. Retail in India - Getting organized to drive growth, A T Kearney

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b) Reducing logistics costs to maintain small warehouses and depots in


every state in order to avoid paying CST on
The logistics cost in India – which includes
inter-state sales. These multiple warehouses have
inventory holding, transportation, warehousing,
resulted in high inventory costs, increased
packaging, losses and related administration
working capital and other overheads.
costs – is estimated at approximately 13 per
cent of GDP and is high when compared to the A simplified tax regime will help logistics players
corresponding figures for major economies. service multiple markets and offer end-to-end
solutions far more efficiently and at much lower
Logistics cost across major markets costs. As per the World Bank's report on the
Country Logistics Cost as % of logistics activity by Logistics Performance Index, a 0.5 per cent
% of GDP organized sector
decrease in logistics cost leads to 2 per cent
The country is USA 9% 57%
growth in trade and a 40 per cent increase in the
expected to Europe 10% 30-40%
range of products that get exported out of the
increase its Japan 11% 80%
country.
infrastructure India 13% Less than 6%
development spend China 18% 10% From multiple taxes to a simplified tax
from 4.7 per cent of Source: Accenture Study regime: Union Budget 2008-09 has proposed
GDP in 2007 to 8 the phasing out of Central Sales Tax (CST ) by
per cent of GDP by India's multi-layered tax regime, infrastructure 2010-11. Once implemented, this measure will
2012. This increased bottlenecks and other inefficiencies have been promote outsourcing of logistics operations and
spend will help the primary reasons in keeping logistics costs encourage the creation of large warehouses at
boost the logistics high in India. Under the existing tax structure, key strategic locations that could operate on the
industry. 2 per cent Central Sales Tax (CST) is levied on 'hub-and-spoke' model. The implementation of
inter-state sales. As a result, companies have had Value Added Tax (VAT) in 2006 has played a role
in reducing logistics costs. The proposed
Proposed infrastructure development across India
implementation of Goods and Service Tax (GST)
could lower logistics costs further.
Srinagar
According to the Confederation of Indian
Industry (CII), improvement of logistics and
Ludhiana
Ambala
warehousing industry can make Indian industries
Chandigarh
Meerut
more cost-competitive, thereby enabling a GDP
Delhi
Jaipur
growth of 11 to 12 per cent, from the existing 7
Agra Kanpur to 8 per cent.
Ajmer
Mughal Sarai
c) Improvement in infrastructure
Varanasi Silchar
Indore
Porbandhar
Ahmedabad
Transportation in India accounts for nearly 40
Nagpur Kolkata
Surat
Baroda
per cent of the total cost of production. One of
Nasik
the major barriers faced by the Indian logistics
industry has been the lack of quality physical
Pune
Hyderabad infrastructure. However, India's core sectors are
witnessing a significant change. The country is
expected to increase its infrastructure
Bangalore Golden Quadrilateral
North-South Corridor
development spend from 4.7 per cent of GDP in
Chennai
East-West Corridor
Dedicated Freight Corridor
2007 to 8 per cent of GDP by 20121. This
Kochi Major Economic Zones
Green Field airport project
increased spend will help boost the logistics
industry. However, delays in critical projects may
Kanyakumari
lead to a failure of this measure to provide the
Source: Cushman & Wakefield Research much needed impetus to the growth of this

1. ICICI Direct report on Transport Corporation of India

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sector. Better connectivity to small towns and Preferred modes of cargo movements
cities is another area planners need to work
upon. Air

Road transportation is currently the most


Water
dominant form of transportation with more
than half of the goods in the country being Rail
moved by road. Almost every mode of
transportation in India is fraught with Road
inefficiencies. For instance, ports – that are vital
0 10 20 30 40 50 60
for foreign trade—have very high turnaround
% of total cargo movement
times when compared with statistics for other
Modernisation of 37 countries. Similarly, the railways, which were a Source: Confederation of Indian Industry
operational airports
popular mode for freight transportation
and development of
(especially the movement of bulk goods), have hand, is a costly mode and its use is restricted to
new airports will
lost ground to road transportation due to courier shipments. It is rarely used for bulk
increase air cargo
limited access to smaller towns. Air, on the other transportation.
handling capacity.
Various modes of transportation and their characteristics
Roads Railways Water / Ports Airports
Advantages: Advantages: Advantages: Advantages:
?Road network of 3.3 ? Spread over 81,500 km, ? Cheapest mode of ? Fastest mode of
million km is the second railways carries 25% of transportation transportation
largest globally total freight movement
?55% of total freight ? Low transportation cost
movement is via as compared to roads
roadways
?Roads offer wide reach
and easy accessibility to
even small markets
Disadvantages: Disadvantages: Disadvantages: Disadvantages:
? High cost of ? Bulk commodities ? Poor state of inland ? Low freight movement
transportation account for 90% of total waterways in the country ? 87% of total freight traffic
? National Highways freight revenues ? High turnover time being handled by airports
account for only 2% of ? Inflexibility to reach deep in metro cities
the total network but interiors
carries 40% of total
freight
Key Developments: Key Developments: Key Developments: Key Developments:
? National Highway ?
Phase 1 of dedicated ?
Cargo handling capacity ? Modernisation of 37
Development Project to freight corridor along of ports to be increased operational airports and
upgrade and modernise Golden Quadrilateral to from 600 million tones in development of new
highways be initiated in 2008-09 2007 to 1500 million airports will increase air
? 24,000 km of National tones by 2015 cargo handling capacity
Highways are to be
upgraded to four/six
lanes. Connectivity to
ports is also being
improved
? The following projects
are under development.
- The Golden
Quadrilateral
- North – South Corridor
- East – West Corridor

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EMERGING TRENDS IN LOGISTICS INDUSTRY Global logistics companies – like Gazeley


Broekmen (Wal-Mart's logistics partner),
Growth within the organised sector
CH Robinson and Kerry logistics – have also
The logistics and warehousing sector in India, till forayed into the Indian market in order to
now, has been highly fragmented and capitalise on the vast emerging opportunities
characterised by the presence of numerous within this industry. Many of them are planning
unorganised players. A large number of players to develop their own logistics parks across the
have been providing services in individual country.
segments like transportation, warehousing,
packaging etc. In 2007, organised players Entry and expansion plans of logistics firms*
accounted for only 6 per cent of the total
?
DHL and India-based the Lemuir Group entered
US$ 100 billion Indian logistics industry. into a 76: 24 joint venture – DHL Lemuir
Logistics Private Ltd.
Increase in market share of organised sector
?
Germany-based Rhenus AG and Hyderabad-
2007 - Logistic Industry 2015 - Logistic Industry
US$ 100 Billion US$ 385 Billion based Seaways Shipping Ltd have set up a joint
venture – Seaways Rhenus Logistics Ltd.

88% ?
The UAE-based Swift Freight has forayed into
the Indian market.
94%
?
Blue Dart Express is planning to add 1 million
square feet of warehousing space to develop 58
warehouses across the country by 2010.
?
The Future Group plans to develop 3 million
6% 12%
square feet of warehouses by 2010.
?
National Bulk Handling Corporation plans to
Unorganized Sector Organized Sector
set up 200 warehouses across the country by
Source: Cushman & Wakefield Research 2012.
*The above section captures samples of publicly reported plans of logistics firms

However, changing business dynamics and the


entry of global third party logistics players (3PL) Another trend witnessed over the last few years
has led to the remodelling of the logistics has been the entry of several large Indian
services in India. From a mere combination of corporate houses – such as the Bharti group,
transportation and storage services, logistics is Tatas and Reliance Industries Limited – into the
fast emerging as a strategic function that logistics sector. The Indian conglomerates
involves end-to-end solutions that improve foresee huge potential for specialised logistics
efficiencies. Logistics players that provided and warehousing facilities, particularly in
limited logistics services, are also planning to industries like retail. Companies like Bharti, Tata
broaden their areas of operation. Realty & Infrastructure, GE Equipment Services
and Reliance Logistics cater to the logistics
Besides expansion of distribution network by needs of their own group companies as well as
both national and regional players, the sector is provide services to the other companies.
also witnessing considerable M&A (merger &
acquisition) activity. For instance, DHL acquired The growth of the organised sector would
Blue Dart, TNT acquired Speedage Express enable the industry to provide cost-effective and
Cargo Service and Fedex bought over Pafex. integrated logistics solutions in order to meet
Consolidation within the industry will lead to the ever-increasing demand. As per estimates, the
economies of scale for the existing organised market share of organised logistics players is
players, thereby lowering costs and improving expected to double from 6 per cent in 2007 to
efficiencies. approximately 12 per cent by 2015.

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Emerging concept of third party logistics Public Sector Private Foreign


Companies Sector Entrants
Third party logistics or 3PL is a concept where a
Transport Corporation
single logistics service provider manages the of India Gati DHL
entire logistics function for a company.
Container Corporation
Although still at a nascent stage, the Indian 3PL Allcargo Fed Ex
of India
industry is growing at a rapid pace. Global
Food Corporation
sourcing activity and fierce competition amongst of India Safexpress Blue Dart
manufacturers to cut costs have made Central Warehouse Reliance
movement of materials rather complex, giving Corporation Logistics TNT
rise to the emergence of several third party Above section reports publicly reported information

logistics players.
Around 3,500 acres Rapid growth of the warehousing sector
of land will be Fuelled by the increasing trend of outsourcing,
developed into coupled with the rapid growth in the Indian The role of a warehouse has also transformed
logistics parks at an manufacturing sector, 3PL is estimated to grow from a conventional storehouse to an
investment of US$ at about 30 per cent annually and become a inventory management set-up with a greater
1,000 million by US$ 30 billion industry by 2010. emphasis on value added services. Warehouses
2012. now provide additional services like
Investment Details/ Plans consolidation and breaking up of cargo,
Firms (2007-08) (in US $ mn) packaging, labelling, bar coding, reverse
DHL 250 logistics etc. It has emerged as a critical
TNT 115 growth driver, leading to large investments
Gati 200 by logistics companies for the development
Shreyas Shipping and Logistics 350 of warehouses and logistics parks. Warehousing
Above section captures publicly reported information and related activities currently account for about
The entry of large third party logistics (3PL) 20 per cent of the total logistics industry.
carriers – like Federal Express (FedEx)and DHL However, it is estimated that by 2010, this
– and network expansion by the existing proportion would increase to approximately 35
domestic players (such as Gati and Shreyas per cent.
Shipping) have also contributed to the The traditional concept of establishing
transformation of services and the business warehouses in the proximity of manufacturing
practices across this sector. facilities and raw material sourcing centres is
Value added services like inventory management, also undergoing a transformation. Today, there is
warehousing, packaging, labelling, tracking of an increased trend of relocating warehouses
shipments etc have witnessed huge demand near consumer markets.
from the corporate sector. The end-users of Currently, the organised warehousing industry
3PL services include major players from the in India has a capacity of approximately
retail, auto components and the electronics 80 million metric tonnes (MT) and is growing at
industry. 35 to 40 per cent per annum. An investment of
The organised 3PL market in India can be approximately US$ 500 million is being planned
categorised into three major segments – public by various logistics companies for the
sector, private sector and foreign entrants. Some development of about 45 million square feet of
of the major players in each category are as warehouse space by 2012.
illustrated.

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Logistics parks – One-stop shop for logistics A logistics park is a notified area that facilitates
needs domestic and foreign trade by providing
services like warehousing, cold storage, multi-
The concept of a consolidated logistics centre
modal transport facility, container freight stations
can be traced back to the Foreign Trade Policy
etc. This area also acts as a place where a
of 2004, which led to the development of Free
company can unload cargo for distribution,
Trade Warehouse Zones (FTWZ). While FTWZ
redistribution, packaging and repackaging.
were aimed at facilitating import and export of
Majority of these logistics parks will be
goods, the need for a one-stop shop that could
developed in the proximity of established and
additionally cater to the domestic market led to
emerging industrial hubs in the country in order
the development of logistics parks as a part of
to tap their logistics needs.
the infrastructure industry in 2005-6.
Majority of logistics
parks are located Logistics parks versus Free Trade and Warehousing Zone SEZs
around SEZ for Logistics parks Free Trade & Warehousing Zone SEZ
ensuring better
?
A logistics park is a special area that has warehouses, ?
Free Trade & Warehousing Zones (FTWZ) are Special
supply chain including a cold chain for perishables, and an area Economic Zones (SEZs) with a focus on trading and
management. earmarked for automobiles and containers. These parks warehousing. They mainly cater to the international
focus on the domestic markets. markets.
?
Minimum area requirement for FTWZ is approximately
?
No specification laid on minimum built up area.
40 hectares.
?
Being part of the infrastructure industry, the incentive
includes 22% tax exemption on income for continuous ?
Incentives are the same as those given to SEZs
operations of 10 years.
?
FTWZs offer tax benefits to both developers and
?
Logistics parks offer tax benefits only to developers.
tenants.
?
Majority of logistics parks are located around SEZ for ?
FTWZ is a special category of SEZ and is governed by
ensuring better supply chain management. the SEZ Act.

Planned logistics parks across India By 2012, around 110 logistics parks,
spread over approximately 3,500 acres,
are expected to come up across India at
an estimated cost of US$ 1 billion.
Ambala
Majority of the upcoming logistics parks
Chandigarh 1 2 are being planned in close proximity to
Sonepat
4 state capitals. However, availability of
large land parcels at relatively low cost,
1 Kanpur
Jaipur
2 3 connectivity to multiple markets across
3 Guwahati
Ahmedabad Muzaffarpur - Hajipur states and proximity to industrial
1 1 Bhopal
5
Rachi 1
1
clusters has led to the emergence of
Gandhinagar 1 Indore Jamshedpur 4 Kolkata
1
some tier-2 and tier-3 cities as favoured
4 Raipur
Mumbai 8 1 Nashik Nagpur destinations for the development of
5 1 Vizag
logistics parks and warehouses.
Hyderabad

3
3 Chennai
Bangalore
Note: Figure indicates number of
upcoming logistic parks
Kochi 2

Source: Cushman & Wakefield Research

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INDIAN LOGISTICS INDUSTRY – A the retail sector along with the fact that these
REGIONAL PERSPECTIVE states have several industrial clusters of textile,
pharmaceutical, engineering and automobile
Industrial clusters in India can be broadly divided
industries will favourably impact the logistics
into four economic zones, based on the
sector in this region.
concentration of key industries like
pharmaceuticals, auto and auto-components, Zonal attractiveness for logistics
textiles, machinery and electronic goods. The
Upcoming
presence of these industries is likely to Warehousing space

favourably impact the development of the Upcoming


Logistics Park
logistics industries in these locations.
Existing
Warehouse capacity
Major states that fall in these four economic
zones are: SEZs

? North: Haryana, Himachal Pradesh, Delhi Retail Development


and Punjab
? West: Maharashtra Gujarat and Rajasthan 0% 20% 40% 60% 80% 100%
South West North East
? South: Andhra Pradesh, Tamil Nadu and
Karnataka Source: Cushman & Wakefield Research

? East: Orissa and West Bengal In western India (Maharashtra, Gujarat and
Western India (Maharashtra, Gujarat and Rajasthan), approximately 30,000 acres of land
Rajasthan) has emerged as the most prominent has been notified for the development of non-
destination for the logistics industry. Upsurge in IT/ITeS SEZs. This should lead to increased
demand for logistical services in the region.
Important manufacturing hubs of India
Southern India (Andhra Pradesh, Tamil Nadu and
Karnataka) is a key automobile and auto ancillary
manufacturing market. Several SEZs are
expected to come up in this region, including
multi-product, automobile and textile SEZs. The
presence of a booming pharmaceutical, auto-
component and agro-input industry along with
the presence of seven ports facilitating
international trade are likely to give fillip to the
logistics sector in southern India in near future.
Northern India (Haryana, Himachal Pradesh,
Delhi and Punjab) is a well-established market
for organised retail. Over the next two to three
years, maximum supply of retail malls in the
country will come up in northern India. Apart
from textiles, the region also has major clusters
of consumer goods and food processing industry.
In addition to the Golden Quadrilateral,
Automobile infrastructure development projects like the
Machine Tools Delhi-Mumbai Industrial Corridor, Kundli-
Textile
Manesar-Palwal Expressway and the Taj
Pharmaceuticals
Expressway have led to the development of
Minerals / Mining
several warehousing hubs and inland container
Source: FedEx and Cushman & Wakefield Research depots by the logistics sector.

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Eastern India (Orissa and West Bengal), an LOCATION ATTRACTIVENESS ANALYSIS


exploration hub, is rich in mineral deposits and
A detailed analysis study of the existing and
has clusters of steel, consumer goods and textile
developing logistics infrastructure, manufacturing
industries. With increased emphasis being given
clusters and consumer markets has brought to
to stepping up trade with China, West Bengal
fore key locations that would witness increased
(which is also the gateway to north eastern
logistics activities. These locations can be
states) is strategically poised to become a major
classified as established, emerging, promising
logistics hub within this zone. Several logistics
and nascent.
parks and Free Trade Warehouse Zones are
being developed in this region so that the
logistics requirements of ports (for international
With increased trade) and upcoming SEZs can be met.
emphasis being
given to stepping up Market potential / attractiveness analysis
trade with China,
West Bengal (which High Established hubs Nascent hubs
is also the gateway
to north eastern
states) is
strategically
poised to become a
major logistics hub
Mumbai
within this zone.
Infrastructure Development

Kolkata
Chennai
Hyderabad

Kochi

Bangalore
Gurgaon
Nagpur

Indore Ambala
Vizag

Jamshedpur Ahmedabad

Alwar

Low Emerging hubs Promising hubs

High Low

Market Potential / Attractiveness

Source: Cushman & Wakefield Research

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Established hubs lower rates (as compared to the established


hubs). They have also witnessed significant land
These hubs offer excellent road, rail and sea
transactions in last one year, involving logistics
port connectivity and are also witnessing
and warehousing projects.
significant investments in infrastructure. High
penetration of organised retail, presence of Promising hubs
industrial clusters and upcoming industrial
Promising hubs comprise of areas such as
projects and SEZs in and around these areas
Jamshedpur, Alwar, Ahmedabad, Bangalore and
make these 'established' hubs all the more
Ambala and have considerable prospect of being
attractive. Major ports and existing logistical
developed into logistics hubs. Increase in
hubs – like Mumbai, Kolkata and Chennai – fall
manufacturing activities is bringing about a
under this category.
change in these areas and opening up
Mumbai has emerged as the most-favoured opportunities for the logistics players. At present,
location for the development of logistics parks. these hubs have moderate presence of organised
Investments of approximately US$200 million retail and an absence of multiple industries,
has been planned towards the development of though this scenario has begun to change in the
seven to eight logistics parks on approximately last two to three years. Infrastructure in these
600 acres of land around Mumbai. hubs is still a challenge and needs to be
enhanced in order to attract logistics players.
Emerging hubs
These hubs are known for industries like oil and
Gurgaon,Vizag, Nagpur and Indore fall under gas exploration, textile, oil and information
this category since these hubs have a high technology.
potential, but lack the supporting infrastructure
Nascent hubs
as of now. These hubs however have major
infrastructure projects underway which are Nascent hubs are marked by untapped market
scheduled to be completed within the next potential and limited infrastructure. The potential
three to five years. Infrastructural developments of these hubs is restrained by factors such as
will make these hubs develop into attractive limited penetration of retail, lack of connectivity
opportunities for logistics activities. to multiple markets and the absence of multiple
industries. Hubs like Kochi, an important tourist
These 'emerging' logistics hubs are also
destination, fall under this category. Kochi has
characterised by high growth industries,
immense potential for growth due to the
connectivity with multiple markets and
presence of an international airport and a port.
availability of large land parcels at relatively

INDIA REPORT | AUGUST 2008 11


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KEY LOCATIONS FOR THE LOGISTICS Major logistics infrastructure


SECTOR established/under construction in Kolkata:
Kolkata ?A 108-acre logistics park is being developed
near Kolkata at Unsani Mouza, which is
Kolkata is amongst the oldest port cities in the located at a strategic junction between three
country and accounts for about 6 per cent of national highways (NH 2, NH 6 and NH 34).
the total container traffic in India. Situated on This logistics park, which is also accessible
the Golden Quadrilateral, Kolkata is well to north-eastern states, provides the
connected to other major cities of India by possibility of domestic and global trade
road and rail. It is also the gateway to the north- with China (via Nathu La pass).
east Indian markets and a key location for
?A logistics park of around 250 acre is
trade with China. Proximity to textile and
auto-component industry clusters and other proposed to be developed through a joint
manufacturing units has made Kolkata a major venture between Tata Realty and
economic centre. Infrastructure Ltd and Dubai-based Jafza
International near Kolkata.
Ten Special Economic Zones (SEZs) in the
?An integrated logistics park spread over 72
proximity of Kolkata have received in-principal
acres is being developed at Haldia. Formal
approvals. This will result in major demand
approval for the development of a 113-acre
for logistics in this region. As a result, centres
Free Trade Warehousing Zone at Haldia has
like Haldia, Falta, 24 Pargana, Dankuni, Kharagpur,
also been received.
Bantala and Durgapur are expected to witness
substantial logistics activities in the near ?There is a proposal to develop a supply
future. chain and cargo hub at Durgapur.

Kolkata city map


Katwa

Raniganj Jhenida

Adra Durgapur Guskhara


Navadwip Krishnagar
Sonamukhi NH2
Bagula
Bankura Barddhaman Kalna
Ranaghat
Memari 24
24 Pargana Jessore
Bishnupur
Bangaon
Pandua NH34
NH35
Barakpur
Khulna
Habra Gobardanga
Dankunj
Singur Barakpur
Unsani Daulatpur
North
Ghatal Mouza Basirhat
Dum Dum
Haora
KOLKATA
Taki Mongla
Chakulia Jhargram NH60 Bantala
Rajpur
Kharagpur
NH6 Tamluk Falta Baruipur

NH41

NH5 Haldia
Baripada
Egra
Jaleswar

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research

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Mumbai Due to the growth in the logistics industry


within the region, rentals are expected to
Mumbai, the commercial capital of India, has for
witness an upward movement. Warehouse
long been an established logistical hub. Two
rentals in Panvel are expected to increase by 15
major ports near Mumbai account for
to 20 per cent over the next two years.
approximately 60 per cent of the container
trade in the country. Mumbai also has the Major logistics infrastructure established /
busiest airport in India in terms of cargo traffic. under construction in Mumbai:
Several manufacturing clusters, focusing on
?By 2012, eight logistics parks spread across
machine tools, FMCGs, drugs and
600 acres of land are expected to come up
pharmaceuticals, are present in proximity of
around Mumbai at an estimated cost of
Mumbai. Bhiwandi is the largest warehousing
around US$ 200 million.
location on the outskirts of Mumbai while
Panvel is fast emerging as a warehousing cluster ?An in-principal approval has been received
due to its proximity to the Jawaharlal Nehru for two Free Trade Warehouse Zones at
Port Trust (JNPT) led by the availability of large Panvel that will be spread across 270 acres.
land parcels. Demand for warehouse and
?Approximately 20 medium to large
logistics services are expected to accelerate
further due to the scarcity of quality container freight stations (CFS) are being
warehouses, increase in foreign trade and the developed along the Uran-JNPT road.
upcoming Maha Mumbai Special Economic Zone.

Mumbai City Map


Vasai Creek

Bhiwandi

Thane Belapur Kalyan


Road Ambivli

Bhiwandi

Sanjay Gandhi Dombivli Ulhasnagar


National Park
Ambarnath

Badlapur

Thane NAVI
Creek MUMBAI

MUMBAI Kalamboli

Panvel

Shedung Chinchavli
JNPT Kolkhe
Village
Village

Dronagiri Khalapur

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2008 13


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Hyderabad technology park adjacent to the newly-


commissioned Hyderabad International Airport
Hyderabad as a logistical hub provides excellent
will give further impetus to the growth of the
connectivity to large markets in southern and
logistics sector in this region.
western India. In addition to having established
clusters of textile and engineering firms, Major logistics infrastructure established /
Hyderabad is also an important centre for the under construction in Hyderabad:
pharmaceutical industry. A large number of
?Five logistics parks, spread across 220 acres,
upcoming SEZs have necessitated the
are being developed by large, organised
development of logistics for the domestic
private logistics players. These parks are in
market as well as for global trade.
various phases of development and are
Jedimetla, Suraram and Sanat Nagar are existing scheduled to be completed by 2010-12.
warehouse hubs while Medchal Road along
?By 2012, around 10 million square feet of
NH7, Patancheru to Sangareddy along NH9,
warehouse space is expected to come up in
Hyatt Nagar (near Ramoji City) and the
this region. A formal approval has been
outskirts of Shamshabad are upcoming locations
received for the development of a 300-acre
for the logistics sector around Hyderabad.
Free Trade Warehouse Zone near
Two apparel export parks, a Free Trade Hyderabad.
Warehouse Zone and several textile parks are
?The new greenfield international airport at
being established in a 15 to 20 km radius of
Shamshabad near Hyderabad would enhance
Hyderabad. Formal approval for a 300-acre
the existing cargo handling capacity of this
electronic and biotech SEZ, a 1,500-acre mega
region from 45,000 tonnes per annum to
industrial park at Pashamylaram and the
1,00,000 tonnes per annum.
proposed development of a hardware

Hyderabad city map

Pudur

Gundla-
Kandi pochampally

NH9
Secunderabad

Serilungampalle Trimulgherry
NH202
Bharat Ghatkesar
Nagar Colony
Lalbahadur
Nagar

Osman Hyderabad
Uppal Kalan
Sagar Kapra

Moninabad
Chevella Himayat NH9
Sagar Nodrigul
Koheda
Anajpur Malkapur
Maheswaram

NH7

Palamakul Ibranhimpatan
Shahabad Thimmapur
Kothur Ameerpet

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2008 14


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Chennai Proximity to electronic and automobile


component manufacturing clusters and good
Chennai is the second largest port in terms of
connectivity through NH 4 and NH 45 has led
container cargo traffic. It's status as an emerging
to the emergence of Sriperumbudur as a major
passenger car export hub has increased the
logistics location. Kancheepuram, Oragadam and
importance of having a good logistics network in
Tirvallur are the other upcoming logistics
this region.Various manufacturing clusters
locations in close vicinity of Chennai.
focusing on textile, engineering goods and
automobile components are also present in Major logistics infrastructure established /
proximity to Chennai. With over 28 under construction in Chennai:
international cargo flights operating per week,
?Six logistics parks spread across 240 acres
Chennai is the best connected destination in
are being developed in and around Chennai.
southern India.
?A formal approval has been received for
The prominent logistics hubs in Chennai are
three Free Trade Warehouse Zones, spread
Madavaram, Poonamalle and Thiruvottiyur. They
over 900 acres.
offer good connectivity to industrial locations,
highways and sea ports.

Chennai city map

Pulicat Lake
NH205 NH5

Pakala
Puttur

Ponneri
Nagari NH205
Kakinada

Tiruttani Tiruvallur

NH4

Chennai

Sriperumbudur
Katpadi
NH46 Madras EPZ
Walajapet NH4
Kanchipuram

Walajabad Nandivaram-
Kalavai
Guduvancheri

Arani

Uttiramerur NH45
Peranamallur

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2008 15


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Nagpur Major logistics infrastructure established /


under construction in Nagpur:
Nagpur is located strategically in the centre of
India and is an ideal location for a 'hub-and- ?The Nagpur airport is being developed as
spoke' distribution model in the country. A India's first international air cargo hub.
major location along the North-South road
?Six logistics parks spread across 240 acres
corridor of the country, Nagpur is well
are in various phases of development and
connected to many state capitals by road and
are expected to be complete by 2012.
railways. Steps such as the gradual dissolution of
taxes (and more specifically the central sales ?A rail-based logistics park – spanning 60
tax) and the ongoing infrastructure development acres with facilities to handle bulk and
will help Nagpur become the multimodal container cargo for domestic and foreign
logistics hub of the country. trade – is scheduled to be operational by
2009.
With the development of MIHAN, a multi-
product SEZ, Nagpur will witness increased ?A 148 acre logistic park with road and rail
industrial and commercial activity in the near connectivity is proposed to be developed
future, leading to increased demand for logistics near Nagpur at an investment of US$ 50
services. million.

Nagpur city map


Kanhan
Kamthi

NH7

Ring Rd Sidharth
Nagar

Ring Rd
Nagpur
Kachimet
NH6 Ram Nagar NH6
Gondakhairi
Jawahar Chitnis
Nagar Nagar
Parsodi

Shri Nagar Ulhas Nagar

Badil Kheda

Ralpur
Mihan SEZ

NH7

Parsodi

Gumgaon
Jamtha

Wagdara

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs

Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2008 16


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Vizag (Visakhapatnam) Major logistics infrastructure established /


under construction in Vizag:
Located on the Golden Quadrilateral,Vizag is
one of the largest ports in terms of the volume ?A 20-acre central logistics hub that would
of cargo it handles. Several state-owned heavy provide end-to-end logistics solutions is
industries like steel plants, oil refinery and being planned at an investment of US$ 15
fertiliser plants are present in proximity of this million at Atchutapuram near Vizag.
city. The keen interest displayed by the Andhra
?There is a proposal to develop an SEZ in
Pradesh government to develop the Kakinada-
the Atchutapuram-Rambilli belt, about 50
Vizag belt as a Special Economic Zone would
km from Vizag. This would bring in
lead to higher demand for logistics services in
substantial investments in logistics, since
this region. A 3,500-acre industrial park is
these locations will allocate space for
proposed to be developed at Parawada, about
logistic and warehousing development.
30 km from Vizag.

Vizag city map


Vepagunta Rushikonda
Sabbavaram Chippada
Meghadri Simhachalam
Arilova Endada
Gedda
Colony
Reservoir Vishalakshi
NH5 Nagar
Madhavadhara HB Colony
MVP Colony
Ganesh
Nagar Railway
New Colony
Sheela Chinna
Nagar Jagadamba Waltair
Junction
Parawada
Port Area
Kurmannapalem Auto Nagar
NH5 Sri Hari
Gajuwaka Puram

Peddagantyada

Steel Plant
Colony
Gangavaram
Desa
Pathrunipalem
Diddapalem

Atchutapuram

Simhadri Power
Plant NTPC

Nakkapalli
Chipurupalle

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2008 17


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Gurgaon 17 upcoming SEZs in locations around Gurgaon


like Sonepat, Badli and Delhi , will strengthen
Gurgaon is ideally situated to cater to the
Gurgaon's position as a prime logistical hub.
logistics needs of the NCR and facilitate import-
export traffic in the industrial areas of Haryana, Major logistics infrastructure established /
north-Rajasthan and Punjab. Several auto- under construction in Gurgaon:
components manufacturers, electronics and
?The proposed development of India's largest
general manufacturing clusters are situated in
multi-product SEZ spread across 2,500
close proximity to Sonepat, which is strategically
acres between Garhi Harsuru and Badli will
located on NH 1 and offers connectivity to NH
add additional space for warehousing and
71, NH 24 and NH 58. The 135-km Kundli-
logistics.
Manesar-Palwal expressway under construction
will connect major national highways and ?A 180-acre logistics park has been
provide connectivity to Uttar Pradesh and developed at Patli near Gurgaon.
Rajasthan.
?A 100-acre rail link logistics park with an
Gurgaon has the advantage of being situated on inland container depot, container freight
the Golden Quadrilateral with easy access to services and a warehouse complex is being
the dedicated freight corridor giving it a clear developed at Garhi to connect the NCR
advantage of developing a logistical hub. Further, with the ports in western India.

Gurgaon city map


Khekra
NH1
Sonipat

Bawana
Sampla

NH71

NH10

Bahadurgarh

NH24

New Delhi

Dallupura
Najafgarh
Jhajjar Village

Noida
Badli

Basai Road
Pandawala
Okhla

NH8

NH2
Gurgaon
Udyog
Garhi Harsau Vihar

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2008 18


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Bangalore SEZs at neighbouring Hassan district are likely to


further stimulate logistics and warehousing
Bangalore (Bengaluru) lies on the Golden
demand in Bangalore. Existing prominent
Quadrilateral and has excellent road, rail and
warehouse locations in Bangalore includes
airport infrastructure. Accessibility to the ports
Hoskote, Whitefield, Peenya, Doddaballapur,
of Chennai and Cochin has led to emergence of
Hosur Road and Devanahali.
Bangalore as an attractive hub for exports. In
addition to the established manufacturing Major logistics infrastructure established /
clusters of garments and textile, booming retail under construction in Bangalore:
sector and an emerging biotechnology industry
?The development of a 7-acre cargo village at
has increased the potential of logistics and
the new Bangalore airport near Devanahali.
warehousing sector in Bangalore.
?Four logistics parks, spread across 140 acres,
Two notified Special Economic Zones (SEZ)
are to be developed in various phases by 2012.
catering to Biotechnology sector and upcoming

Bangalore city map


Chik
NH4 Ballapur
Sidlaghatta Chintamani
NH48
Tumkur Srinivaspur
NH206 Gubbi Dod
Ballapur
Devanhalli
NH7

HH4
Kolar
NH4 Yelahanka
NH48
NH 207
Kunigal
Malur Bangarapet
Bangalore

NH 209

Hosur Kuppam
Ramanagaram Anekal
NH219
Channapatna
Maddur Kelamangalam

Bargur
Mandya Krishnagiri

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2008 19


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Indore Major logistics infrastructure established /


under construction in Indore:
Located in central India, Indore is connected to
other parts of the country through NH 59 and ?The development of a logistics park and the
NH 3. Indore is a prominent hub for automobile expansion of the existing container freight
products, pharmaceuticals, textiles, food station at Pithampur have been proposed.
processing and heavy engineering. Indore which Additionally, some logistics parks are being
already has a planned 2,500 acres multi - developed by private players.
product SEZ, is also the likely location for an ?Inland container depots are under
additional 2.490 hectares of industrial cluster development at Pithampur (Indore) and
proposed by the Madhya Pradesh Audyogik Malapur (Bhopal).
Kendra Vikas Nigam Ltd (MPAKVN).
?There is a proposal to develop 1.6 million
metric tonnes of warehouse space through
public private partnership.

Indore city map

Sukliya Vijay Nagar


Nanda
Nagar

Kalani Cloth
Nagar Indore
Market
Chhatribagh Chhavni
Nai Duniya Anand
Nagar
Sudama
Betma NH59 Nagar Indra Puri
Colony
Dhanvantri
Nagar

Bypass Road

Pithampur

NH3

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs

Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2008 20


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Alwar other significant developments taking place near


Alwar. The development of a dedicated rail
Alwar is a prominent industrial location in
freight corridor and increase in trade through
Rajasthan and is strategically situated near NH8
the ports of Kandla and Mundra have made
and NH11. It is also well connected to the north
Alwar a potential logistics hub.
Indian states of Punjab, Haryana, Uttar Pradesh
and Himachal Pradesh. Major logistics infrastructure established /
under construction in Alwar:
Alwar is also located in close proximity to
Bhiwadi, a rapidly industrialising region. Other ?Alwar offers accessibility to ports through
industrial and investment regions like Jaipur, rail and roadways to landlocked north Indian
Dausa, Ajmer and Kishangarh make Alwar a states through Bhiwadi, an upcoming multi-
potential location for warehousing and logistics modal logistics hub.
development.
?The city has proximity to inland container
An export promotion industrial park at Tapukra depot and container freight stations at
and an upcoming SEZ at Khushkera are the Rewari and Jaipur.

Alwar city map


NH58
Khekra
Bhiwani Muradnagar Moradabad
Hapur NH24 Hasanpur
Bahadurgarh
Charkhi New Delhi
Dadri Jhajjar Ghaziabad Sambhal
Gulaothi

Gurgaon Dadri
NH71
Sikandarabad Jahangirabad Bahjoi
Bulandshahr
Pilani Faridabad
Mahendragarh NH93
Taoru Sohna Dibai
Rewari Khurja
Chirawa Khushkera Palwal Jewar
NH8
Narnaul Tapukra Atrauli

Tijara Khair
Bahror Hodal Aligarh Soron

Sikandra Kasganj
Chhata
Kot Putli Rao
Kaman
Hathras
Alwar Vrindavan Etah
Nh18 Mathura
Dig Jalesar
Nagar Sadabad
Shahpura NH2
NH93
Manoharpur Kumher

Nadbai Bharatpur Tundla


Agra
NH18
Baswa Fatehpur
Chomun NH11 Sikri Firozabad
Mahwa

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs

Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2008 21


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Kochi Vallarpadom and Puthuvypeen. Several other


infrastructural developments also make
Kochi is one of the principal ports of India
Vallarpadom and Puthuvypeen ideal locations for
strategically located on one of the busiest
the development of logistics parks and
maritime routes. Kochi is well connected to all
warehouses.
major cities in southern India. It is well-
connected to the hinterland by NH47, NH49 Major logistics infrastructure established /
and NH17 and various rail links. The Kochi Port under construction in Kochi:
Trust has initiated several projects like an ?An international container transhipment
international bunkering terminal and a port- terminal (ICTT) along with a Special
based SEZ that will necessitate the development Economic Zone (SEZ) with rail and road
of logistics services in Kochi. link support is being developed at
The Kerala State Industrial Development Vallarpadom at an investment of US$ 730
Corporation (KSIDC) has acquired million. The container terminal, along with
approximately 750 acres of land for the the SEZ, would promote logistics services
development of SEZs. Districts of Kannur, like warehousing, packaging services and
Kozhikode and Malappuram have been short- freight forwarding.
listed for SEZ development catering to the ?Tata Realty and Jafza International have
textile, healthcare and rubber product industries, proposed to develop a 150-acre logistics
all of which require efficient logistics support. park at an investment of approximately US$
These SEZs would benefit from the good 75 million.
accessibility provided by the Kochi port.
?An inland waterway connecting Kollam and
Formal approvals have been received for the Kottappuram is being developed by Inland
development of 950-acre port-based SEZs in Waterways Authority of India (IWAI).

Kochi city map


Kozhikode &
Malappuram NH47
Ponnani Shoranur
Chittur

Pollachi

Anaimalai

Dhali

Indira Gandhi
National Park

Valparai
Irinjalakuda
Eravikulam
National Park
NH17

Mathikettan Shola
National Park
Kalamassery
Perumpavur

Alwaye

Puthuvypeen NH49

Vallarpadam
Muvattupula
NH49 Virapandi
Cochin
NH220
NH47
Kombai

Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research

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STEPS TO STREAMLINE THE LOGISTICS CONCLUSION


INDUSTRY
Amid a booming economy and a surge in
Setting up logistics parks in SEZs can demand for logistics and warehousing activities,
improve India's competitiveness: Around many logistics companies are reinventing
70 to 80 non-IT/ITeS SEZs have been notified in themselves and targeting at larger roles. With
the country in order to cater to various sectors. bottom-lines strengthening, the sector is
These notified SEZs along with emerging attracting both public as well as private equity.
economic corridors and industrial parks require This should help enhance the service offerings of
efficient transportation and supply chain the sector as well as help existing players
support, connectivity with various markets and diversify into new business areas.
other value-added services. Therefore, in order
Over the next five Traditional Indian logistics players are now
to ensure that SEZs operate successfully and
year, 3,500 acres of organising themselves in order to become more
improve India's competitiveness, logistics parks
land is scheduled to scalable both nationally and internationally.
catering to an entire range of logistics
be developed as Analyst attribute this change to the ongoing
infrastructure should be developed in emerging
logistics parks and retail boom in the country that is creating huge
economic corridors and industrial parks.
warehouses. business opportunities, with the added advantage
Therefore, real A national logistics strategy can improve of being exposed to the latest technology in the
estate decisions will efficiency and lower costs: In order to field of logistics. The entry of global firms such as
play a crucial role in achieve high customer service at low cost, India UPS, TNT, NV and DHL International GmbH has
developing the needs to formulate a national logistics strategy made domestic players more competitive and
competitive that encourages competition and facilitates quality-conscious.
strength and participation by the private players. Such a Over the next five year, 3,500 acres of land is
enhancing the strategy should aim at aligning diverse state and scheduled to be developed as logistics parks and
effectiveness of central government policies, set targets for the warehouses. Therefore, real estate decisions will
logistics players. growth of this sector, chalk out roles for the play a crucial role in developing the competitive
public and the private sector, focus on strength and enhancing the effectiveness of
infrastructure development and facilitate the logistics players.
entry of new players in the logistics industry.
Historically, warehouses have been located in
Regulating the sector to bring about close proximity to primary markets. However,
uniform service standards: Today, a wide gap the abolishment of CST and an improvement in
exists in the services being offered and the infrastructure would enable companies to re-
pricing of various industry players. A regulatory align their supply chain and move closer to
authority that specifies minimum service consumer markets. This changing business
standards and benchmarks pricing can be dynamics and evolving regulatory framework has
instrumental in establishing a uniform service given rise to new emerging locations. As a result,
standard in India's logistics and warehousing demand for real estate will no longer be
industry. restricted to only the existing primary logistics
hubs in the country. Since almost one-third of
Granting industry status to logistics can
the total realty development in the sector is
address inefficiencies: Several inherent
expected to take place in emerging locations,
inefficiencies can be addressed by granting an
many tier-2 and tier-3 cities that offer good
industry status to the logistics and warehousing
connectivity to multiple markets will witness
sector. This may also encourage public-private
increased activity from logistics players, providing
partnership and increase the government's focus
a thrust to the real estate market.
on this sector. Such a step will also help in the
consolidation of this industry and provide it While we are witnessing rapid growth of the
better access to finance. logistics and warehousing industry, a number of

INDIA REPORT | AUGUST 2008 23


INDIA LOGISTICS INDUSTRY - REAL ESTATE'S NEW POWER HOUSE
R E P O RT

A RESEARCH PUBLICATION

bottlenecks continue to restrain the Modern retail stores, supermarkets and


development of this sector. India's transport hypermarkets can only be successful if they are
network growth, for instance, is still not been backed by a robust logistics infrastructure.
able to keep pace with the country's booming Similarly, India's dream of becoming a
economy. While several initiatives like manufacturing hub to the world may well remain
rationalisation of taxes and investment in a dream if the logistics infrastructure does not
infrastructure have been undertaken, a lot keep pace with the growth in other sectors in
remains to be done as far as organising and order to enhance the country's existing cost
modernising this sector is concerned. Granting arbitrage. In short, the growth of several
an industry status to logistics and warehousing industries and their cost-competitiveness vests
sector, efficient implementation of infrastructure squarely on the growth and development of the
projects, simplification of the regulatory logistics and warehousing industry. An increased
structure and availability of skilled manpower focus on this sector by both the government and
are critical to the growth of the Indian logistics the private players will go a long way in
industry. strengthening the 'India advantage' and helping
the country achieve its foretold position of a
super power.

About Research & Business Analytics Group Cushman & Wakefield is the world's largest For more information on
Cushman & Wakefield is committed to collation of high privately held commercial real estate services firm. Cushman & Wakefield, contact :
quality base data and assembling detailed statistics for Founded in 1917, it has 221 offices in 58 countries Anurag Mathur
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For more information:
Tanuja Rai Pradhan reports available on its online Knowledge Center
Associate Director - India at cushmanwakefield.com/knowledge.
Research & Business Analytics Group
+(91 124) 469 5555
tanuja.pradhan@ap.cushwake.com
Author of the report:
Satish Tiwari
Senior Associate
satish.tiwari@ap.cushwake.com

Disclaimer
This report has been prepared solely for information purposes. It does not purport to be a complete description of the markets or developments contained in this material. The
information on which this report is based has been obtained from sources we believe to be reliable, but we have not independently verified such information and we do not
guarantee that the information is accurate or complete.

Cover photograph courtesy : Schenker AG

INDIA REPORT | AUGUST 2008 24


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