In today’s sophisticated supply chain management, logistics are a pillar. It is described as the wide range of operations related to the effective and efficient transfer of semi-finished or finished goods from one company to another or from a manufacturer/distributor/retailer to the final customer. It refers to cargo handling, warehousing material movement, flexible packaging inventory control, production scheduling, promotion, forecasting, and other value-added services. The upgraded version of a logistics park, the MMLP, offers various value-added services in addition to rail and road-based transportation. These days, supply management is a widely recognised concept that goes by several names around the globe.
India is one of the fastest growing nations, with thousands of industries coming forward for its growth. With the increased business, the logistics sector is another crucial factor helping the business grow, making hefty profits.
Many foreign firms are investing in Indian logistics sectors, like Panattoni, which is about to invest USD 200 million in developing industrial and logistics parks. In this write-up, let’s see how the logistics parks and foreign investment by Panattoni are set to change the whole facet of the sector.
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What are Multi-Modal Logistics Parks (MMLPs)?
The National Highways Logistics Management Limited, under the National Highways Authority of India (NHAI) and the Ministry of Road Transport and Highways (MoRTH), are leading the development of Multi-Modal Logistics Parks (MMLPs). This will be developed in a hub-and-spoke method for improving the country’s shipping and logistics sector at a price that is lower freight costs and time, reducing warehousing costs, reducing vehicular emissions, and congesting traffic.
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Why are Logistics Parks Thriving in India?
India is one of the fastest developing countries in the world. With more industries getting started in different sectors, warehouses are one of the major requirements for businesses. Be it the clothing sector, vehicle part suppliers or other goods; every industry needs a space where they can store their goods with ease of transportation and distribution. Business and logistics parks are the answer to their requirement.
Logistics include storing, transportation, managing, preparing, and planning the order of the goods, making it less burdensome on the industries. The more industries set foot in India, the more industrial and logistics parks thrive in the country. Logistics parks are becoming one of the country’s most profitable sectors of real estate, making them a great investment choice. As the industrial and logistics parks are becoming an essential part of the supply chain, companies worldwide are stepping forward to develop an adequate logistical solution for the companies to take out smooth business operations.
Here are the key players that are helping this sector to thrive:
- Third-party logistics (3L) is one of the preferred investment trends by most companies instead of taking out their in-house logistics operations. The 3L operations save time and help better manage the industries’ goods.
- By 2026, the logistic park’s market is expected to reach a whopping ₹ 2,245 billion in terms of profits with a growth compound annual rate of 10.90% with more investments and the Indian e-commerce sector driving their business to increase the supply and storage needs to reach their customers fast.
- Businesses must spend money implementing new technology if they want to stay competitive. Customer convenience should continue to be the first concern. However, choosing to finance is a risky approach. Productivity gains in logistics are sizeable, necessitate the execution of intricate projects, and call for technical and technological competence.
- The boost from the foreign investors in India contributed highly to industrial and logistics park development growth. Since these inventors want to leave their impression in this sector, the development is taking place with a significant increase in tax benefits, policy changes, and systematic reforms helping to explore this new asset class of the country.
Benefits of Industrial and Logistics Parks’ Investment in India
For every business to grow and reach customers beyond borders, especially in the industrial sector, a space that works as storage, logistics park, distribution centre, and transportation space is important. Being a country where the growth of industries is in full swing, the need for logistics and industrial parks in India is simultaneously increasing. The wide roadways and the spacious parks make it easy for the industries to store and transport their goods efficiently.
With the rapid growth, the cost of developing logistics and industrial centres in India is high, making it a profitable investment for real estate development firms. Below are some of the benefits of developing a logistics and business park in India:
- With more industries coming forward, the demand for these spaces will keep increasing.
- It will effectively help earn high profits for the logistics parks’ construction company and the industries.
- It will make it easy for businesses and industries to store and transport their goods to customers worldwide.
Panattoni to Be the Venture Capitalist of 4 Indian Logistics Parks
US-based company Panattoni is set to invest USD 200 million (₹ 1,597 crores) in developing four Indian logistics and industrial parks. The investment will help cater to the needs of warehouses across the country.
Panattoni, the largest industrial and logistics real estate development company, has entered the Asian market with its investment in India. Headquartered in Bangalore, Karnataka, the US-based firm is set to fulfil the demands of high-end quality spaces.
Sandeep Chanda, MD of Panattoni in India, said the company would develop more quality spaces to fulfil the third-party logistics, manufacturing, and e-commerce demand. Sandeep seemed to be buoyant about the projects and had confidence in Panattoni’s establishment in India for long-term logistics and industrial sectors’ growth in the Indian real estate market, as per the Press Trust of India (PTI).
In its first phase to start the development of four logistics and industrial parks in India, the company is in talks with the landowners to purchase 250 acres of parcel of land in Pune, Chennai, Delhi-NCR, Bengaluru, and Hyderabad for the construction. The proposal by Panattoni includes construction, land purchase, and other related development costs.
The funds for developing industrial and logistics parks will be raised in a Special Purpose Vehicle, also known as SPV. The level will be created separately for constructing these parks in different cities of India.
