Decoding the Indian Warehousing and Contract Logistics Sector’s Expectations from the Union Budget 2023-24

The Indian logistics and supply chain sector has emerged as a significant backbone for the Indian economy in the post-COVID era and continues to play a crucial role toward strengthening India’s position as a global economic power. A powerful and cost-effective logistics and warehousing market has emerged as a critical feature in modern global business and economic environment, and this is currently one of the major areas of focus for the Indian government, as evidenced by its recently launched National Logistic policy, which will be incorporated on a large scale in 2023.While lowering logistics costs by building effective infrastructure is also a prime objective, the goals cannot be met without a comprehensive approach to the improvement of the complete supply chain, including warehouses. And one such vital trade supply chain segment is India’s warehousing and contract logistics!

The Indian warehousing market was worth INR 1,206.03 billion in 2021 and is projected to increase to INR 2,872.10 billion by 2027, growing at a CAGR of 15.64% between 2022 and 2027. In line with national policies such as ‘Make in India’ and ‘Digital India,’ the warehousing sector is looking to advance digital adoption, adopt greener strategies that meet international standards, and push value-added collaborations with the industrial sector.While geopolitical stressors have posed additional threats to international commerce, India’s logistics and warehousing sector has emerged stronger and holds a lot of potential.

As the Indian government focuses more on infrastructure development and boosting Indian exports through different programmes, the sector faces a number of challenges that, if addressed in the upcoming union budget, will aid in the sector’s long-term progress and holistic development. These are as follows:

  • Steel price reduction: Steel accounts for 30%-40% of warehouse construction costs, and since 2021, these prices have skyrocketed due to a global shortage, leading to an increase in procurement. While many factors contributed to the price increase during and after the pandemic, it has had an impact on the warehouse automation market, specially for fixed infrastructure solutions, where steel can account for up to 83% of the total price. Steel prices are a major impediment to the Indian warehousing sector, ranging from raising the expense of digital adoption through automation to extending the lead time of construction. If the upcoming Union budget considers lowering steel duty/price for industrial warehouse construction, it’ll be a huge boost to development.
  • Better Transportation Infrastructure: As part of the National Logistic Policy, the ambitious Gati Shakti plan intends to build an ecosystem that connects roads and railways from the hinterlands to coastal India’s ports. By 2025, the plan calls for the construction of approximately 2 lakh kilometers of national highways and nearly 6,000 kilometers of 4-6 lane national highways in coastal regions, as well as the development of 2-4 lane national highways that connect different state capitals. This is critical for the sector because roads currently transport 64% of Indian freight.While the policy proposes a 100-lakh-crore outlay for road projects, prompt and efficient deployment would be critical to the sector’s growth. It is also worth noting that, in addition to the proposed initiatives of constructing dedicated logistic parks closer to ports, an improved road network will help decongest existing warehousing hubs, decrease rentals, and unlock better value for land available for warehousing.
  • Capital subsidies and public-private partnerships for multimodal logistics parks: Multi-modal logistic parks have also been a key focus of the GoI’s National Logistic policy, with the government announcing a USD 31.63 billion investment in 2021 for the planning and development of the logistic parks through a public-private partnership (PPP) model.In line with this, additional capital subsidies for the development of grade-A warehouses in smaller towns, as well as support for Public-Private Partnerships for logistic parks with improved accessibility to new motorways, would help achieve the goal of lowering freight costs across the country, which are currently very high at 13%-14% of GDP, compared to other developed global economies, which are 7%-8% of GDP. In the 2023 budget, a focus on easier access to investment for industrial warehousing, including simplified FDI processes, would be appealing.
  • Green warehousing subsidies: Because the transportation and logistics sector has been a major contributor to environmental pollution, there is an urgent need to address this at the public policy, business, and individual levels.Government intervention in ensuring reasonable pricing, incentivizing/subsidizing green efforts, and establishing and implementing laws has become critical. Reduced solar panel import duties to effectively minimize capex investments, as well as a re-examination of the tax structure and subsidies for environmentally conscious practises, are among the aspects that, if considered in the upcoming Union Budget, will benefit the logistics and warehousing sector in not only reducing its carbon footprint, but also aligning with international business standards and winning larger global mandates.
  • Subsidies for technology adoption: While automation has been a buzzword since COVID, and the emergence of intelligent warehousing is now a necessity, digitisation continues to require significant investment.Easier and more appealing loans/access to funds for tech adoption and the establishment of smart warehouses, particularly in the cold storage and specialty warehousing segments, would go a long way toward advancing the adoption of tech-enabled solutions on a larger scale, thereby improving the efficiency and operational seamlessness of the entire supply chain.

In line with the government’s vision of ‘Atmanirbhar Bharat’ and becoming a 5 trillion dollar economy by 2025, the above inclusions, and the goal to lower the overall logistic costs and improve efficacies, the above-mentioned pre-budget expectations from the sector would go a long way, if taken into account, in creating a strong and trustworthy infrastructure for foreign and domestic trade.

Surface Movement Solutions

At LP Logiscience, our land transport solutions offer a vast network of products and services to help our clients achieve a competitive edge. Our top-notch land shipping solutions ensure that your shipments are delivered reliably and on time, whether it's a single parcel shipment or the management of the entire surface supply chain. Our land transport network is equipped to transport goods of any kind to any location, with a track record of delivering millions of successful ground shipments with quality and timeliness.

This will close in 0 seconds

Air Movement Solutions

In the ever-evolving world of logistics, a comprehensive solution that combines speed, agility, and dependability is critical. At LP Logiscience, we offer a range of services to meet complex logistical requirements while maintaining an optimal balance between cost and speed to market. Choose a tailor-made solution that best suits your needs to start improving the efficiency of your supply chain. Our air movement solutions enable you to transport time-sensitive, high-value cargo quickly and efficiently, bypassing any supply chain disruptions caused by congested ports, labor shortages, or limited capacity. Whether used as a standalone service or in combination with inland transport modes, warehousing, and customs services, LP Logiscience is your ideal partner.

This will close in 0 seconds

Multimodal Movement Solutions

Our aim is to grow with our customers on their multi-sales channel journeys across various vertical markets such as retail, electronics, and healthcare, among others. We focus on developing capabilities that will lead to more standardized solutions in a dynamic environment. Our innovative pick and pack solutions and automation tools streamline e-commerce supply chains and allow for easier handling of seasonal peaks. Collaborating with a world-class logistics provider like LP Logiscience means getting better solutions. We handle all aspects of returns, from physical returns to quality checks, repairs, and disposals, ensuring that our clients' businesses run smoothly.

This will close in 0 seconds

Rail Movement Solutions

Our goal is to support our clients in their e-commerce journey across different vertical markets, such as retail, electronics, and healthcare. We strive to develop standardized solutions that cater to a dynamic environment, using innovative pick and pack solutions and automation tools that streamline supply chains and handle seasonal peaks. Working with a top-tier logistics provider like LP Logiscience guarantees superior solutions. We handle all aspects of returns, including quality checks, repairs, and disposals, ensuring seamless business operations. With our LCL rail freight multimodal service, we offer regular, scheduled departures and capacities across major city centers in India, providing reliability and flexibility for our clients.

This will close in 0 seconds

Temperature Controlled Movement Solutions

We understand the unique needs of perishable items and collaborate with cold chain partners to ensure they arrive on time and in perfect condition. Companies that can provide quality products with a long shelf life will have an advantage as demand for fresh products grows. However, this can be a challenging task, as perishable goods are fragile and require quick transportation. Maintaining a strict cold chain throughout the entire journey is essential to preserve freshness and taste. We adhere to all regulations when shipments cross borders to ensure that the process is as seamless and quick as possible. Our perishables teams at LP Logiscience provide safe and efficient transportation for temperature-sensitive cargo to exact specifications. Whether shipping fresh fruits and vegetables by land or air, our solutions ensure that temperature-sensitive products arrive on time and in perfect condition, with optimal transit times and modes of transportation. Our deep knowledge of various perishable commodities, including local legislation, allows us to provide safe and compliant international transportation from source to table. With real-time visibility from door to door, we monitor and steer your supply chain efficiently to ensure that end consumers receive products in the best possible condition.

This will close in 0 seconds

Environment

LP Logiscience's triple zero commitment to environmental sustainability encompasses a zero-waste supply chain. At every stage of our procedures, we prioritize adding value for the consumer and strengthening our competitive edge. Through complete waste prevention, we have modified the way materials move through our entire production process. Our zero-waste initiatives ensure that all materials are recycled or reused, eliminating the need to send waste to water sources, landfills, or incinerators. By reducing supply chain waste, we promote making better use of resources and developing goods and services that align with sustainability principles.

This will close in 0 seconds

Safety

At LP Logiscience, ensuring workplace safety, protecting our personnel, and promoting their well-being are critical components of our success and future. While technology can improve safety in modern warehousing, relying solely on safety precautions is not a solution. We prioritize ensuring that all our staff adhere to safety rules and procedures, not just for their safety but for the greater good of the brands they represent and our environment.

This will close in 0 seconds

CSR

A common goal: to help society progress.

LP Logiscience sees itself as a logistics partner that is part of a larger picture connecting people and communities worldwide. Giving back to the world and being a part of something bigger is central to our values. We work towards sustainable logistics to have a positive impact on the world around us. By transitioning to a zero-carbon business model and guiding our customers towards a zero-carbon future, we hope to make a difference for people living tomorrow. Our commitment to bringing about social progress has been constant since 1919, and we remain dedicated to this goal as the world around us evolves.

This will close in 0 seconds