Analysts and property consultants are of the view that The Goods and Service Tax (GST) regime could usher in consolidation in the Indian warehousing space. The Indian government is trying hard to apply GST in April 2017. Many manufacturers who owned or leased warehouses in nearly every state to avoid CST (Central Service Tax) or duplication of tax, can now instead look to own or lease few big sized warehouses in few strategic locations. Since, GST in full force to be implemented before April 2017, larger warehouses near to popular cities like Mumbai, Delhi, Chennai, Ahmedabad, Bengaluru, Hyderabad and Kolkata will a boost in demand.
Some of the small sized warehouses especially in the smaller cities would find it difficult to sustain in the medium to longer term. Ideal choice for them to convert them info commercial or residential assets. Areas with good connectivity to key routes will get huge demand for warehousing industry. Many industrialits are awaiting to get GST rates finalised and prepare a strategy on consolidating warehousing space.
Indo space, a joint venture between private equity firm Everstone Capital Advisors and Realterm Global, is planning to develop big projects at manufacturing clusters with an investment of over $1 billion over the next 4-5 years to more than double the project pipeline to about 50 million sqft from the current 20 million sqft. Ecommerce companies like Amazon and Flipkart are already in the consolidation process and are moving into large warehouses of around 350,000 sqft from their earlier spaces measuring 50,000 sqft.
The government is setting up inter-state industrial corridors such as the Delhi-Mumbai industrial corridor and freight corridors such as the western and eastern dedicated freight corri dors. Analysts said that more manufacturing activities will be taken up along these routes, which in turn will increase warehousing demand.
Further, with direct sale, companies' inventory of goods will also reduce by nearly a third, as goods will move from manufacturing hubs to the distributors directly , instead of it being stocked.
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