Logistics Cos Plan to Invest Rs 50 Billion in India

 

As per the statement given by a senior official of an industry body, logistics companies in India are making a gigantic investment plan of Rs. 50 Billion for the next three years (2010-2012) to expand their warehouse operations throughout the country, as reported by REUTERS.

 

“The investment has been committed by various players such as Future Group, Gati Ltd, AFL, Safe Express and a few others,” Tushar Jani, Chairman, CII, Western Region Logistics Sub-Committee, said, as reported by REUTERS on November 11, 2009.

 

The proposed investment will significantly expand warehousing space to 30 Million sq feet in the next three years, he said. But this investment will not be enough, as India will have to face a shortage of 50 Million sq feet of warehousing space because land procurement is a very complex process. Apart from space shortage problem, another area for concern is scarcity of manpower since the industry will need half a million people in the next 3-5 years to keep its operation running smoothly in the country.

 

Reaffirming the statement, RNCOS, a leading marketing research firm, has said in its report "3rd Party Logistics Market in India" that the demand for third party logistics (3PL) business has been gaining ground in India with globalization and companies more focus on the better management of their supply chain processes. The companies are also adopting 3PL system to increase their penetration level in the market. Moreover, the 3PL services are seen with more trust and have given a new turn to the management of internal as well as external logistics process with the support of logistic infrastructure and spreading awareness about efficient logistics practices.

 

Apart from this, many MNCs are also eyeing the Indian logistics market to provide their services in some of the major cities and industrial sectors. For instance - Deutsche Logistics, the largest transport and Logistics Company in Europe, has announced that it is planning to bring $150 Million investment in the Indian logistics sector. Of this total investment, $37.5 Million will go into the establishment of IT and infrastructure while the remaining will be used to erect physical infrastructure in for four major hubs – Mumbai, Bangalore, Kolkata and Delhi from where only outbound air cargo movement will be executed.

 

A Senior Research Analyst at RNCOS said, “The Indian transport and logistics industry is currently passing through from a transition phase with a lot of opportunities to be tapped and explored. It is expected that companies’ focus diversion on core business activities and improving infrastructure will strongly push 3PL services in future.”