E-Commerce Firms To Invest $2Bn In Infrastructure
Driven by the growing popularity of online shopping in India, the e-commerce market, which is expected to reach $20 billion by 2020, will see companies investing close to $2 billion in logistics, infrastructure and warehousing in the next six years, a study said today. According to a joint study by consultancy firm PwC and industry body Assocham, Indian e-commerce industry will spend $950-1,900 million by 2017-2020 on the above mentioned areas for better speed, efficiency and growth.
“The growth of the e-commerce industry has a huge potential in the country translating into beneficial effects for the manufacturing industry, infrastructure and jobs,” Saurabh Srivastava, director, operations, PwC said. He added that the potential of the sector and the likely liberalisation in the form of FDI could be a vital factor in attracting significant investments resulting in better infrastructure and robust supply chains.
The report titled ‘Evolution of e-Commerce in India’ estimates that over the next 3-4 years, there will be an addition of 7.5-15 million square feet of space in the form of fulfilment centres. This indicates an addition of 6-12 per cent to the space available in form of organized warehousing in India and almost 25-50 per cent of all the incremental addition of consumption driven warehousing space in the same period.
The total spend on warehousing and sortation centres could be as high as 3-6 per cent of top-line revenues, which represents an cumulative spend of over USD 450-900 million of spend in warehousing till 2017-2020 and the industry is expected to spend an additional USD 500- 1,000 million during the same period on logistics functions, leading to a cumulative spend of $950-1,900 million by 2017-2020.
The study notes currently India operates at a very low level of air cargo penetration characterised by only a few airports equipped to handle large volumes of express delivery parcels. It predicts as the market 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.
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