Why in News?

• The government is likely to introduce warehousing schemes at village and National level to build an efficient storage infrastructure.
  A National Warehousing Grid along the National Highways may also be introduced in the Budget.

National Warehousing Grid:

• The Centre’s scheme aims at broad integration of the warehousing capacities in India.
• Approximately 90% of the warehousing space is controlled by unorganised players, with small warehouses of less than 10,000 sq ft area.
• An action plan has already been approved by the Centre on sectoral basis for the construction of steel silos with a capacity of 100 lakh metric tonnes in PPP mode for modernizing storage infrastructure and improving shelf life of stored food grains.

Significance of scheme:

• Practically, much of the country’s warehousing capacity outside of the agri sector is in the unorganised sector, with small warehouses of less than 10,000 sq ft area.
• Currently, of the total warehousing space of about 180 million sq ft in the country, the industrial segment accounts for about 86% and the agricultural sector the rest 14%, according to NITI statistics.
• Two-thirds of the warehousing capacity in the food storage segment is owned by the public sector.
• Apart from conventional storing services, India’s warehousing capacity is increasingly being used to offer value-added services such as the consolidation and breaking up of cargo, packaging, labelling, bar coding and reverse logistics.

Plugging deficiencies:

• The project is aimed at plugging deficiencies given that India’s current cold storage capacity at 25 MT is barely sufficient for 10% of the fruits and vegetables produced in the country.
• The lack of adequate storage infrastructure is an important reason for the high cost of food products and wastage.
• Nearly 60% of the modern warehousing capacity in India is concentrated in top six cities, namely Ahmedabad, Bengaluru, Chennai, Mumbai, Delhi-NCR and Pune, with Hyderabad and Kolkata being the other major markets, according to Care Ratings.
• This trend is driven by the concentration of industrial activity and presence of sizeable urban population around these clusters.

Beneficiaries:

• The prime beneficiaries of the new wave of growth in warehousing include peripheral locations of Tier 1 and Tier 2 cities.
• Much of the fresh investments would go into creating storage facilities for retail and consumer goods.

Forthcoming Challenges:

• The primary challenge that India’s warehousing market currently faces is acquisition of a feasible land parcel, given that land cost constitutes the largest component of a warehousing project.
• While rental values that a warehouse owner can charge are primarily driven by demand and supply factors, land prices are inherently dependent on multiple factors like development control regulations, infrastructure development and the best alternative usage of land.