What factors resulted in the yearly growth of leasing activities in the Ambala-Rajpura warehouse market?
There is high growth in demand and consumption across Tier II cities in India. This, coupled with cheaper rentals, we are witnessing a visible shift in demand for these locations as compared to the ‘big cities’. In the case of the Ambala-Rajpura industrial area cluster, its location plays a key role. The area is centrally located – about one to three hours in proximity to major Tier II cities including Ludhiana, Jalandhar, Ambala, Amritsar, Shimla, the Chandigarh tricity area and Dehradun. The industrial area cluster provides easy access to the northern states of Punjab, Haryana & Himachal Pradesh. The state of Uttarakhand, too, is geographically closer to Rajpura than Delhi NCR and hence we are seeing an uptick in demand around leasing in the area. This consumption story stands validated given that a large percentage (over 60%) of space uptake in the area is due to growth among e-commerce, retail and FMCG sector players during 2022.
Initiatives taken by the state and central government towards the growth of the warehousing and logistics industry
A number of states have started giving importance to the warehousing and logistics sector and announced policies that have given the industry a boost and had a significant impact on its growth. On the back of these reforms, we have seen a reduction in red tape along with private investment being incentivised from both Indian and foreign players. Private developers like IndoSpace have benefited with these moves and we have established our footprint in traditional industrial locations such as the Ambala-Rajpura industrial area and market.
Strategic moves like the PM Gati Shakti scheme and the recently announced National Logistics Policy and warehousing standardisation norms are expected to further amplify this growth. They will also help formalize the warehousing and logistics sector, away from the more traditional, unorganised style in how it previously functioned. With more investments coming in, it is a great opportunity to deploy cutting-edge, technology-led advanced solutions such as high-quality, temperature-controlled warehouses and taller structures with a vast amount of vertical storage solution options. As an additional boost, the Central Government has also engaged with industry bodies and leaders to understand how to create the best environment to enable economic expansion which will go on to develop better understanding between the industry and government-enabled development. This will ultimately create a network effect to upgrade infrastructure across the country.
The segments contributing to the growth of the Ambala-Rajpura warehousing market
The growth that we witness in 3PL and e-commerce, is largely driven due to increasing levels of consumption spending. E-commerce has levelled the playing field among brands and raised awareness across geographies. Traditional, industrial centres from regions such as Jalandhar (sporting goods) and Ludhiana (apparels) have established themselves as major vendor markets for e-commerce players in the northern belt. In fact, they have evolved as major consumption centres as well over the recent years. This is a trend that accelerated especially during the covid-19 pandemic with higher adoption of e-commerce services and an increased sense of brand awareness via social media channels.
This growth in consumption spending, along with the rapidly maturing Indian economy has also drawn interest from national, large-scale modern retail players and FMCG giants that are looking at these regions as the next growth frontiers.
What does the future of MMLP look like in the region and what benefits does it bring to the warehousing and logistics operations?
The primary benefits of Multi-Modal Logistics Parks (MMLPs), in the logistical framework, are the reduction of touchpoints across the multiple legs of transportation. This allows a greater opportunity for companies to consolidate their load, reduce their stock transit points and present themselves with a suitable ecosystem to provide for more value-added services. The ambitious initiative by the Ministry of State Transport to promote the development of 35 nodal MMLPs across India is again a reflection of the promise that these parks hold.
Ambala’s positioning in the parallel development of the Amritsar-Delhi-Kolkata industrial corridor, and the Eastern Dedicated Freight corridor, places the “Ambala-Rajpura” region as one of the more suitable geographies for multi-modal operations. The Government’s push to encourage Indian industries to “Manufacture for the world” along with the growing consumption story from the region will attract further private investment in the region to complement these infrastructure initiatives.