Under the PPP model based on the concept of revenue sharing, the private warehousing players can build warehouses while the government can also assist them in obtaining the required approvals to construct warehouses in those land parcels.Īvailability of skilled manpower is another challenge for the sector in the way of scaling up the business. The government can think of rolling out PPP (public-private partnership) model in the warehousing sector to monetise the land parcels owned by the government itself. Therefore, if the government proposes the creation of a land bank and allot land from that land bank to the private players to develop Grade - A warehouses, such policy initiative will not only help warehousing players circumvent the legal hassles but also give a much-needed impetus to the capacity building in the warehousing sector. The process of acquiring a large chunk of land directly from the landowners especially the farmers are fraught with various legal, Land ceiling act and approval processes. So, the reduced construction cost will fuel growth and profitability in the warehousing sector.Īccessibility to land remains a key challenge for private players in the warehousing sector. Cement and steel typically take up almost 60 percent of the construction cost. Another way to offer support to the warehousing sector would be to offer tax rebates or incentives to the cement or steel sectors which will, in turn, help in lowering the cost of constructing warehouses.
The government should also take necessary policy initiatives to facilitate the better credit facility, low-interest rates and FDI into the warehousing sector so that the warehousing sector can grow and expand.
So, the government can propose tax rebate to the warehousing companies so that they can invest more in constructing warehouses. Single window clearance facility with stipulated timelines for each approval can really help warehousing developers.Ĭonstructing a warehouse involves huge capital investment with Grade-A quality construction costs between Rs 1,400- Rs 1,600 per square feet.
Earlier, the demand space size for warehouses used to be 10,000-20,000 sqft which has shot up to big size warehousing space (200,000-400,000 square feet) - mainly due to the proliferation of e-commerce players, the government can propose certain relaxations in regulatory approvals to accelerate the pace of warehousing construction. The first and foremost concern is the time-consuming process of obtaining multiple approvals from various government departments for constructing a warehouse.
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