Rise of e-commerce in India boosts warehouse and logistics sector

By

Isabelle Crossley

Published
Dec 3, 2018

India’s logistics firms and warehouses are attracting attention from property developers and investors as the country’s e-commerce market grows from strength to strength.

India’s logistics sector is booming thanks to the success of the e-commerce market, according to a recent report by Bloomberg. The compound annual growth rate (CAGR) of India’s e-commerce market is the highest in Asia according to a recent Bain & Co. report and this rapid growth in e-commerce has created a high demand for logistics to deliver online purchases.

A number of foreign investors including Canada Pension Plan Investment Board, Brookfield Asset Management Inc., and Warburg Pincus LLC among others are investing in logistics in India. As the demand for logistics has risen due to online retail growth, so will boosting the logistics sector in turn facilitate more ecommerce growth.

Another development in the logistics market is that, following the introduction of the Goods and Services Tax (GST), India’s 29 states were unified into one market which allows for pan-India logistics companies to take over. Large scale logistics is also demanded by large e-commerce businesses such as Amazon and Flipkart, both of which are currently working on their respective logistics arms.

 In India, warehouses made up 26 percent of private equity real-estate investments between 2014 and 2017 which totalled $3.4 billion (Rs 22,619 crore), according to Knight Frank LLP. Logistics investments can yield high returns and are eligible for low cost funding. As India’s logistics sector continues to gain funding, e-commerce distribution will become more competitive and no doubt expand.