Urban Warehousing: Shaping the Future of Logistics and E-Commerce Infrastructure

Traditionally, the term ‘warehouse’ suggested images of shabby, unkempt godowns, often with leaky roofs which allowed rainwater to seep in. Not surprisingly, deliveries were frequently late and goods damaged. These godowns were run by small, mostly informal players and manned by unskilled workers. The majority of them were built on legacy land parcels in areas close to big cities but outside the octroi limits.

Apart from octroi, several other reasons existed for this sorry situation, especially inefficient infrastructure and a lack of investments by the industry and logistics companies. The resultant high logistics costs (as much as 13% of GDP by some estimates) were a major hindrance to productivity gains in the economy.

Change drivers
Over the last decade, however, the Indian logistics sector has undergrown a revolution. Driving this are the massive investments made by the Indian government in infrastructure – road, rail, air and water transport. These investments are predicated on the realisation that if India must achieve its stated target of a USD five trillion GDP, it cannot happen with inefficient supply chains.

The introduction of the Goods and Services Tax in 2017 and the consequent abolition of the octroi system have finally made India a unified market, allowing the free movement of goods. (In retrospect, it seems odd that 12 independent sovereign European nations signed the Maastricht Treaty in 1991 to create a unified European market, while we, as a single nation, had to wait for another 26 years to achieve the same goal.)

These infrastructure investments and GST have combined to transform the warehousing scenario and the Indian logistics sector, radically. Bhiwandi, near the Mumbai Metropolitan region, is a classic example. A power loom town of yore, it developed into a logistics hub because of its connectivity and the fact that it was close to Mumbai, Thane, and Navi Mumbai, yet outside all these city limits (and hence exempt from octroi).

A decade ago, warehouses in Bhiwandi were the kind of godowns as mentioned earlier.
Of course, today, the scenario is different. If you are looking for a warehouse in Mumbai then you will mostly end up in Bhiwandi. The warehouses in Bhiwandi and many other places are emerging as logistics hubs feeding India’s metros. These clusters are ultra-modern, technology-driven, and follow sustainable practices—all to feed the demand from India’s burgeoning cities.

The rise of the urban warehouse
Two trends are driving the growth of in-city warehousing. With octroi becoming history, manufacturing companies want to cut down on distribution delays. They are therefore opting to stock their finished goods in urban warehouses from where they can be quickly forwarded to their distributors and dealers. Earlier these products would be stored in warehouses outside city limits.

Express delivery is another force driving further innovation in the warehousing and logistics space. It started with e-commerce platforms promising ‘same day’ delivery. In recent times, the rising wave of instant delivery platforms has led consumers to expect deliveries within minutes of placing their orders.

Fulfilling these expectations has meant radically different approaches to supply chains. Warehousing goods outside the city limits and transporting them based on demand will just not work. E-commerce platforms and Third-Party Logistics (TPL) service providers need a hub inside the city to help them meet these consumer demands.

As a result of these two factors, in-city warehouses have become critical for manufacturers and distribution companies to optimize deliveries in urban markets with the highest consumption and spending potential.

At IndoSpace, we are developing a network of in-city warehouses under our INLOGIS brand. The first one, a 150,000 sq-ft facility, is strategically located at Chembur in Mumbai. The proximity to key transportation networks—Eastern Expressway, Eastern Freeway, Mumbai-Bengaluru Highway, and the Mumbai-Agra Highway—is ideal for serving the needs of the city’s consumers. Given the paucity of large land parcels, this vertical warehouse is equipped with state-of-the-art technology.

The facility incorporates several environmentally friendly features, including energy-efficient lighting, solar power, sustainable building materials, and water recycling systems.

The Indian logistics market is growing at a CAGR of about 12% and is expected to cross $380 billion by FY25. This has led to warehousing being recognised as a sunshine sector and attracting massive investments. At IndoSpace, we have already invested $3 billion and believe that the opportunity is massive. In-city warehousing will certainly form a significant proportion of this opportunity.

IndoSpace, with its 52 world-class Grade-A parks, has an extensive presence in the thriving state of Maharashtra. Strategically located in all the major hubs, IndoSpace’s industrial and logistics parks in different locations of Maharashtra like Khopoli, Chembur, Bhiwandi, Chakan, and Ranjangaon offer connectivity to important cities in the state and to the neighbouring states of Karnataka, Tamil Nadu, Telangana, Gujarat, Madhya Pradesh. These parks are well-suited for industrial, warehousing and logistics operations and offer premium amenities for businesses to thrive.