The e-commerce companies are expected to invest nearly USD 6-8 billion in Infrastructure, warehousing and logistics in next few years in India on the back of growing popularity of online shopping in the country, said a study of ASSOCHAM-PwC.
The overall e-commerce industry of the country valued at USD 25 billion and it has been growing with a compound annual growth rate of nearly 35-40 percent every year, said the study. With this pace, the industry is expected to cross the USD 100 billion mark in five years and would touch USD 80 billion by 2020 in India.
If the industry is growing with such a fast pace, it requires relevant infrastructure across the country to set up the business and huge number of warehousing will be required where country is lacking currently and surely with this investment logistics sector on which the industry is entirely dependent will grow further.
As the e-commerce gathers momentum and moves to the tier-II and tier-III cities, there will be increasing demand of expanding air cargo connectivity to smaller towns. Presently, there is a very low level of air cargo penetration in the country and only a few airports equipped to handle large volumes of express delivery parcels, said the study.
“Innovations are very important in this sector, as the demand is always for more reach and faster shipping at lower costs. The companies will need to invest in automation, while utilising existing resources as well”, said Mr D S Rawat, ASSOCHAM Secretary General.
Commercial real estate firm CBRE has said in its recently released report that E-commerce has emerged as one of the main drivers for warehouse. In 2015 approximately 2 million sq. ft. of warehousing space was taken up by e-commerce firms. As per its study, the share of e-commerce in warehousing jumped around 22 percent during 2015, which grew only 2 percent in 2012. Even the office space demand from e-commerce firms witnessed a 170 percent year-on-year growth- from 0.7 million sq. ft. in 2014 to 2 million sq. ft. in 2015. It shows how commercial real estate, infrastructure and warehousing have witnessed the growth from e-commerce industry in recent time, which indicates further growth in the said sector.
E-commerce firms also started moving towards smaller Indian cities like Jaipur, Ahmedabad, Nagpur, and Mangalore and others for establishing their fulfilment centres (FCs). Tier II locations such as Ludhiana, Surat, Ahmedabad, and Jaipur are currently attracting the next phase of leasing activity, the CBRE study has noticed.
Roughly 60-65 percent of the total e-commerce sales are being generated by mobile devices and tablets in the country and industry leaders believe that m-commerce could contribute up to 70 percent of their e-commerce revenues. The growth of e-commerce industry is beneficial effects for the manufacturing industry, infrastructure and jobs, noted the Assocham-PwC study.
As we are aware growth of construction equipment industry entirely depends on infrastructure development, the investment from e-commerce firms in infrastructure, warehousing and logistics will also help the CE industry. Major construction machines like excavators, backhoe loader, cranes, Redi-mix trucks, Concrete Plants and others demand may rise as investment comes.
As more warehouse will be coming up in the country and investment in logistics industry will inflow, material handling equipment like forklifts, tippers, stackers, Unloaders, wagon tipplers, conveyors, commercial vehicle and others demand likely to rise in the country.