Spokesperson, Transport Corporation of India
Expanding warehouses to Tier-2 and Tier-3 cities comes with a fair share of challenges, especially for the latter. While Tier-2 cities have started seeing a rise in demand, there is still a long way to go to be at par with urban centers. The infrastructure development in these cities is evolving at an unprecedented speed. Moreover, with various Smart City projects, finding suitable land as well as complying with the necessary local regulations, is a challenge.
Upgrading warehouse centers in these areas would require significant investment in sustainability and modernization methods. Another challenge foreseen is attracting and retaining skilled labour in these areas.
Growth potential and outlook
The potential for expanding warehouses in Tier-2 and Tier-3 cities in India is promising. These cities are experiencing an enormous growth in demand for modern warehouse facilities due to expansion of e-commerce, increased internet penetration, and proximity to customers.
Multiple factors are driving the increasing `demand for Grade A warehouses in India. Primarily, India’s rise as a global supply chain power, along with government initiatives aimed at boosting exports and infrastructure, has led to a surge in manufacturing activity. Also, there is a rising need for warehousing facilities to meet global standards. A heightened focus on Health, Safety and Environment (HSE) compliance standards has led MSMEs and corporates to shift towards Grade-A warehouses. This shift has been a key driving force behind the growth of the warehousing sector, with an impressive 21% growth observed in FY22.
Trend for bigger warehouses
Currently, India is experiencing a wide range of warehousing demands. The surge in online shopping coupled with the rise of D2C brands and quick commerce, has increased this demand. These facilities are now equipped with efficient retrieval and storage systems, primarily in categories like grocery, pharmacy, retail, and food delivery.
There’s also a shift observed in inventory management practices - from “JIT - Just in Time to JIC - Just in Case”. These factors have led to discussions on warehousing capacities based on cubic feet metrics instead of square feet. This trend is gradually driving the demand for bigger warehouses to accommodate the storage of more goods.
Government policies have played a crucial role in advancing India's logistics & supply chain industry. Initiatives such as Gati Shakti Master Plan, Inland Waterways, Bharatmala Pariyojana, Multimodal Logistics Parks, Dedicated Freight Corridors (DFCs), and Sagarmala have contributed to the construction of world-class infrastructure.
These improvements not only reduce time to market but also serve to reduce wasted costs, thereby boosting the supply chain's value. Furthermore, regulations promoting sustainability through green building and environmental certifications have encouraged the use of modern and environmentally friendly warehousing systems. The improved ranking of India in the World Bank's Logistics Performance Index (LPI) suggests that these initiatives have a positive impact on the sector's growth trajectory.
TCI warehouses & services
TCI manages more than 14 million sq. ft. of warehousing space in India and neighboring countries like Bangladesh, Nepal, and Sri Lanka. We cater to almost all industry verticals, ranging from retail, pharma, hi-tech, etc, with the following facilities:
- Physical infrastructure of multi-tier racking, pigeonholes, cage bins, mezzanine floors, dock-levelers, forklifts, stackers and reach trucks
- IT systems from WMS, hand-held scanners and EDI (Electronic Data Interchange) well documented and refined processes for receipt, put-away, picking, packing, manifest and shipping
- VAS (Value Added Services) such as QC, labeling, kitting, returns, enabling back-end support to customers.
- Coordination with suppliers as well as end-customers.