Manufacturing Logistics

Indian Manufacturing & Logistics:
On a Roller Coaster Ride!

January 2017
INDIAN MANUFACTURING & LOGISTICS: ON A ROLLER COASTER RIDE! 1

CONTENTS INDUSTRIAL REVOLUTION 4.0 16
INTRODUCTION 4 CHANGING MANUFACTURING DYNAMICS 18
INDIA VISION 2035 6 GETTING THE SKILL SETS RIGHT 19
ECONOMIC BACKDROP 8 LOGISTICS SECTOR LEAP FROGS 20
STRONG INFRASTRUCTURE IN MAKING 9 MODAL PERFORMANCES 21
INDUSTRIALIZATION & POLICY CHANGES 12 INVESTMENT CLIMATE IN INDIA 22
TAXATION - GOODS AND SERVICES TAX (GST) 14 WAY FORWARD 28
2 INDIAN MANUFACTURING & LOGISTICS: ON A ROLLER COASTER RIDE! INDIAN MANUFACTURING & LOGISTICS: ON A ROLLER COASTER RIDE! 3
INTRODUCTION
India currently stands on a path of a phenomenal growth
trajectory with its economy well poised to become one of the
leading economies of the world. In order to achieve this feat, the
country needs to take to some structural strengthening along
the four main foundation pillars;
Robust Policy
Framework
Manufacturing
for the future
Strong Efficient
Infrastructure Logistics
backbone
In this paper, we have tried to How does India stand We have also tried to draw a comparison from select emerging (typically BRIC
travel along a chronological path, in 2035? nations) as well developed (typically USA and Japan) economies of the world to
reviewing the performances of understand better the growth dynamics of these countries. Finally, this paper tries
these four foundation pillars in Are we on the right to appraise the investment climate in India especially in the manufacturing and
past and peeking into the future, warehousing asset class.
track to achieve the
primarily looking for answers like;
future goals? Enjoy the chronological roller coaster!
INDIA VISION 2035
MILLION PLUS CITIES, 2035
INDIA POPULATION, 2035 68, from 53 in 2011 (Census)6
1.53 Billion (18% of World) from 1.3 Billion
in 20151 URBAN POPULATION, 2035
650 Million (43% of India’s population)7
INDIA GDP MANUFACTURING SECTOR

USD 10 Trillion (7.3% of World) from USD
USD 1 Trillion by 20255
2.1 Trillion in 20151
EXPORT MARKET
USD 80 Billion by 20204
Second largest
Electricity usage in 2035
telecom industry in the world
will be in a range of 2746-
with 969 million subscribers 2 Internet penetration will increase 5554 Billion kWh7
to 80% from 18% in 20143
Total freight traffic of Road
and Rail: 13,000 BTKM
(Billion Tonnes Kilometres)
in 2031 – 327 Total road length of India
100 Smart Cities by 2022 will reach 15 million km
1
World Bank. USDA Projections and JLL Analysis.
2
TIFAC Technoscape: Technology Vision 2035, pg.12, 2035. from 4.87 km in 20127
3
PWC, ‘Future of India: The winning Leap’, pg-55, 2014.
4
TIFAC: Technology Vision 2035, pg-12, 2015.
5
McKinsey & Company, ‘Fulfilling the Promise of India’s Manufacturing sector’, March 2012.
Available from [http://www.mckinsey.com/business-functions/operations/our-insights/fulfilling-
the-promise-of-indias-manufacturing-sector].
6
TIFAC Technoscape: Technology Vision 2035, pg-7 and 9. PWC, India winning leap.
7
TIFAC Technoscape: Technology Vision 2035, pg-7, pg-8, pg-9, pg-5.
ECONOMIC BACKDROP STRONG India’s investment in infrastructure
INFRASTRUCTURE IN
is growing at CAGR of 17%
Next two decades are expected to put India in game changer position backed on its demographic potentials, urbanization, economic growth (2006-2015), compared to the rest
of Asia which is growing at 7 – 8%
MAKING
and labour force thus accelerating growth in logistics and manufacturing sector.
annually.13
India’s GDP is projected to grow at a CAGR India’s share in World GDP to

of 8.2% (2015-2035) to reach US$ 10 trillion increase from 2.8% (2015) to 7.5% Growth Potential of Indian Infrastructure sector:
by 2035, making it the 3rd largest economy (2035)8 INVESTMENT IN INFRASTRUCTURE %
behind US and China8
SHARE OF GDP vs GDP India offers major infrastructure
investment opportunities thanks
to large infrastructure construction
TOP TEN ECONOMIES 2015 & 2035 programmes and governments are
Rapid
actively encouraging the private
urbanization, sector to take a delivery role in India.
increase in
R1
R2
population and
labour force
R1
is expected to In India the investment in
drive Indian infrastructure share of GDP is
R2
Gulf of
R3
economic 10% which is quite high compared
growth and
Mexico
to other BRIC economies and

R9 developed economies like US and
impetus to Source: Bridging Global Infrastructure reports – McKinsey, Planning Commission, Russian Infrastructure - Industry report. Pg. 1.
Japan.
manufacturing Gazprom Bank, Enhancing Private infrastructure investment in Brazil. Pg. 3. Oliver Wyman.15
and Logistic 13
Source: Infrastructure development in Asia Pacific (APECO - PwC) and JLL Analysis
14
Accessing Asia: Investing in the infrastructure imperative - Morgan Stanley)
sector. 15
Bridging Global Infrastructure reports – McKinsey, Planning Commission, Russian Infrastructure - Industry
Source: World Bank, CIA World Fact book, USDA Projections and JLL Analysis report.. Gazprom Bank, Enhancing Private infrastructure investment in Brazil. Pg. 3. Oliver Wyman.
Global Infrastructure Investment

Index which states the
attractiveness of a country as an
POPULATION URBANIZATION LABOUR infrastructure investment market
has ranked India 25th on a list of
41 countries.14
• India’s population to grow by 1.16 • Urban population to grow at 6% • 12 million people projected to enter
times in the next two decades to annually and in next two decades, India’s workforce every year and its
1.53 billion to become 18% of world 650 million people to live in urban projected that by 2030, it will exceed
population share.8 areas by 2035.10 China.11
• India to overtake China’s working • Smart City initiative to improve • 300 million youth will be trained
population by 2030. the efficiencies of city leading to a under the ‘Skill India’ initiative by
conducive business environment. 2022.12
• India’s working population is
expected to cross the 1 billion mark
by 2030, and by 2035, 65% of India’s
population will be in the working age
bracket (15 - 64).8
8
World Bank, Cia World Fact book, USDA Projections and JLL Analysis.
10
World Bank, Cia World Fact book, TIFAC: Technology Vision 2035, pg-9. and JLL Analysis.
11
Institute for Human Development, “India Labour and Employment Report 2014: Highlights’, pg-6, 2014 &
Wall Street Journal, ‘India’s Labor Force: The Numbers’, Available From [http://blogs.wsj.com/briefly/2015/07/22/indias-labor-force/]
12
KPMG, ‘India Soars High’, pg-8, 2016.
AVIATION NATIONAL CIVIL AVIATION POLICY 2016
STRONG INFRASTRUCTURE BACKBONE India’s domestic aviation market grew at

OBJECTIVES 20
• India to become 3rd largest civil aviation
IN MAKING
over 20.3% in 2015, which is the highest
market by 2022 from current 9th position.
growth recorded in the world.19
• Airports having scheduled commercial flights
to increase from 77 in 2016 to 127 by 2019
• Cargo volumes to increase by 4 times to
10 million tonnes by 2027
• Reduction of air cargo dwell time to 24 hrs.
(import) and 8 hrs. (export) by 2017
• The Airport Authority of India to invest
INR 12,964 crore for infrastructure projects
in 13 regional airports.21
AMRITSAR
RAIL
DADRI Ministry of Railways is developing (WDFC) (EDFC)

Western Dedicated Freight Corridor Total length (km) 1504 1856
(WDFC) and Eastern Dedicated Sanctioned cost of project (INR crore) 46,718 26,674
Freight Corridor (EDFC) to decrease
Expected traffic Year 2021-22 (million tonnes) 152.24 153.23
freight transit time substantially.17
Projected completion Oct-19 Dec-19
KANDLA Land acquired (as of Aug 2015) 91% 80%
KOLKATA
MUNDRA
VADHAVAN SAGAR ISLAND

Highway
Construction
Projects
JNPT MUMBAI PARADIP Year of highways
Awarded (In
(in kms)18
Kms)18
VISHAKHAPATTANAM ROAD 2014-15 7,972 4,340
2015-16 10,000 6,000
MARMAGAO
Construction of highways has gained momentum with policy 2016-17
MACHLIPATTANAM (target)
25,000 15,000
initiatives and administrative agility in recent times.
NEW MANGALORE CHENNAI
EDFC
TADADI
WDFC
BANGALORE
Major ports
KOCHI
Upcoming ports
VIZHINJAM TUTICORIN Upcoming International trans-shipment
End-points of industrial corridor/ DFC hub
ENAYAM COLACHAL
Amritsar-Kolkata Industrial Corridor
Delhi-Mumbai Industrial Corridor • Investment Size: INR 400,000 crore (approx.)
Bengaluru-Mumbai economic corridor
WATERWAYS
• 150+ projects for port modernization and connectivity
16
SAGARMALA National Perspective Plan, April 16 Chennai-Bengaluru Industrial Corridor
17
“Progress in Dedicated Freight Corridor”, PIB, Ministry of railways, 07 Aug, 2015 .
• 6-8 new ports, 2 international trans-shipment hubs
18
“Ministry of Road Transport & Highways sets steep targets for 2016-17”, PIB,
Vizag-Chennai Industrial Corridor SAGARMALA PROJECT16 • 14 coastal economic zone to be developed
Ministry of Roads and Highways. Paradip Petroleum, Chemicals & Approved by cabinet on March 2015 to
19
FICCI-KPMG ‘India Aviation Report, 2016. Petrochemicals Investment Regions (PCPIRs) • 400 MTPA capacity to be added within 2020
20
National Civil Aviation Policy, 2016. promote port-led development in the country by
21 The National Waterways Act, 2015 was passed in the parliament
Press clippings, Public Relation department, AAI. Disclaimer: The map is not to scale and the locations marked harnessing India’s 7,500-km long coastline.
are indicative only. to develop internal Waterways as cheaper mode of transport.
INDUSTRIALIZATION & PRE-
INDUSTRIALISATION
INDUSTRIALIZATION
PRESENT PHASE
POLICY CHANGES PHASE
PHASE
Japan emerged as the first Asian

Japan has introduced Industrial Value
Manufacturing stands as one of the major contributors of GDP in Japan, China and Industrialized nation before 1940’s Post 1950’s Japan developed an export-
Chain Initiative which aims to establish
India. Here’s a comparison of the industrialization scenario and how these countries because of the establishment of oriented economy. It sold majority of
a structure that will connect even small
adopted to policy changes to reach the current stage. various economic reforms and modern its manufactured goods abroad and
and mid-sized companies via the Internet
JAPAN
institutional framework, inputs of adoption invested in the purchase of technology,
beyond and sharing of information across
of western technology and large private raw materials, management and
companies and sectors based on the links
investments which created a conducive energy sources for its further industrial
between manufacturing processes and
environment for expansion of industrial development.
business operation systems. 23
economy. 22
Post 1978, economic reforms like

In late 1970s, China had a large Make in China 2025 – Presently have
decentralization of economic policy to
population which was heavily dependent increased their R&D expenditure
promote & ease investments in industry
CHINA
CHINA on agriculture and went through economic to promote digitisation and use of
were taken. Special Economic Zones
crisis24 technologies to upgrade manufacturing25
established & FDI promoted. State owned
Evolved enterprises privatised and reformed to
increase efficiency.
After the economic crisis of 1991,

‘Make in India’ initiative to open-up the
Post independence, policies were pro– comprehensive economic reforms
manufacturing market for FDI on the other
industrialization but all major sectors were like – liberalisation, privatisation and
INDIA
hand, ‘Skill India’ initiatives targets to
state owned and offered restrictions for globalisation were introduced allowing
align the workforce to the future need of
doing business26. private sector and foreign investments to
the industry28
promote manufacturing sector27
INDIA
JAPAN
Evolving China and Japan at their
Matured present stage of evolution
are promoting policies,
reforms and investments in
R&D and hi –tech industries
walking in line with
Industrial Revolution 4.0
India 2035 Digital India vision

aims to explore technological
Pro investment policies
possibilities to attain India’s
is expected to promoting
development goals taking into
investment in various sector
22 http://countrystudies.us/japan/26.htm account new opportunities
will affect industries and
23 http://www.meti.go.jp/english/publications/pdf/journal2015_05a.pdf offered by application of
24 PWC, ‘People’s Republic of China – A Profile’ 2008. infrastructure.
25 CSIS, ‘Made in China 2025’, 2015. Available from – [https://www.csis.org/analysis/made-china-2025] Technology and promoting R&D
26 IDFC, ‘The Political Economy of Infrastructure Development in Post-Independence India’ 2007. in myriad sectors.
27 Montek S. Ahluwalia, ‘Economic Reforms in India since 1991: Has Gradualism Worked?’, 2002. Disclaimer: The map is not to scale and
28 KPMG, ‘India Soars High’, 2016. the locations marked are indicative only.
TAXATION - GOODS AND SERVICES PRE-
TYPE INDUSTRIALISATION NEED FOR GST
TAX (GST) PHASE
Dual GST System GST subsumed existing MST, Federal Telecommunication Tax, etc.
Canada was going through an economic
India is expecting a major change in taxation structure with GST implementation. HST = GST+PST
CANADA
crisis in the 1990s, and levying taxes
Herein, we intend to look back in two successful models of GST (dual and single) in Post implementation of GST Short-term increase in prices,
on inputs was increasing costs and
Canada and Australia. GST Rate decrease in the magnitude of the fluctuations in tax revenue,
discouraging investments
13% -15% however the revenues exceeded expectations.
GST subsumed the complex tax structure including Replaced the

Singular GST existing WST, State Government taxes, duties and levies, etc.
AUSTRALIA
Australia was going through a sustained
System
economic growth. Singular GST was one
Post implementation of GST Short-term increase in prices,
CANADA of the many economic reforms.
GST Rate 10% decrease in the magnitude of the fluctuations in tax revenue,
1991 GST however the revenues exceeded expectations.
Implemented
Dual GST System
GST = CGST
+ SGST There are various indirect tax systems Yet to be implemented.
in the present tax framework. Few are
INDIA
Commodity wise levied by the center and rest are levied Once implemented, GST is expected to bring-in a major change
variation, what’s by the state. GST can help eliminate the in the economic, manufacturing and logistics development of the
GST slabs pegged inter-state tax hurdles. country.
to be 5%, 12%,
18% & 28% *
Implementation of GST to
promote an resource efficient
supply chain planning, as state
boundaries will ‘hypothetically’
Gulf of
Mexico vanish for purposes of supply &
AUSTRALIA distribution.
2000 GST
Implemented
*Disclaimer: Rates for GST slabs mentioned are as per
INDIA November 2016.
Source: Central Board of Exercise and Customs
Ministry of Finance, Government of India
Expected in For further update on information please refer the following link:
http://www.cbec.gov.in/htdocs-cbec/gst and http://www.finmin.
2017 nic.in/GST/index.asp
Abbreviations: GST= Goods and Services Tax;
HST=Harmonized Sales Tax; PST=Provincial Sales Tax;
WST=Whole Sale Tax; CGST= Central GST; SGST=State GST
Disclaimer: The map is not to scale and the locations marked
are indicative only.
INDUSTRIAL REVOLUTION 4.0
INDUSTRIAL REVOLUTION ARTIFICIAL DIGITALIZATION

CHRONOLOGY
29 Globally, manufacturing is going INTELLIGENCE Application in supply
Enabling machines to make chain to increase the
through the phase of Industrial decisions and perform access and fluidity of
activities autonomously. data / data flow.
Revolution 4.0 where real and
End of 18th Century
1st Industrial Revolution (IR 1) virtual worlds meet and involves the WAREHOUSING
Digitalization and Network
Mechanical Production Facilities were introduced, which full integration of manufacturing PROGRAMMED Collaboration to allow
used the power of Water and Steam.
‘DRONES’ FOR capacity planning and
technologies and systems to make a LAST-MILE LOGISTIC demand forecasting for
CONNECTIVITY warehousing31
“smart factory”. Impact of
30
Beginning of 20th Century Industrial Revolution 4.0

2nd Industrial Revolution (IR 2) on Industrial & Logistics Sector
Mass production was introduced which used
electrical energy. TRANSPORTATION
ROBOTS STARTING Access to data through
TO DOMINATE Digitalization would aid
It is expected that ‘Make in India’ Some Instances to depict
FACTORY SHOP routing optimization for
initiative will join hands with the
Beginning of 1970s FLOOR the march into Industrial efficient transport planning.
4th Industrial Revolution (IR 4.0) in
India in next two decades. Revolution 4.0
3rd Industrial Revolution (IR 3)
Electronics and IT were introduced in Manufacturing sector,
with further automated production. India’s thrust towards
the ‘Digital India’
initiative is in line with SECURITY
the IR 4.0 vision. CONCEPTUALIZATION Digitalization
Present AND IMPLEMENTATION would increase the
‘Smart City’
OF SMART CITIES transparency of Supply
4th Industrial Revolution (IR 4) chains making it more
initiative is also DRIVERLESS secure and reliable31
expected to have a CAR
Cyber physical production systems and ‘Artificial Intelligence’
significant impact TECHNOLOGY
are expected to be introduced in manufacturing on IR 4.0 in India.
31
AT Kearney, ‘Digital Supply chains: Increasingly Critical for Competitive edge’, pg-2, 2015.
29
Deloitte, ‘Industry 4.0: Challenges & Solution for digital transformation and
use of exponential technologies’ 2015.
30
Industrie 4.0, Smart Manufacturing for the Future, GTAI (Germany Trade and
Invest) 2014.
CHANGING GETTING THE SKILL SETS RIGHT
MANUFACTURING LOW-COST LABOR FORCE
DYNAMICS
India offers some of the lowest cost labour in the world (USD 1.72/hour in 2015) while boasting an abundance of engineers, which puts India
in a competitive position compared to other BRIC nations.33
Strong Manufacturing Sector in India.
MANUFACTURING
AS % SHARE OF
GDP vs GDP
LABOR FORCE
vs MANUFACTURING
Source: World Bank and JLL Analysis Source: World Bank, Deloitte 33, Trading Economics and JLL Analysis
Note: Data for Manufacturing % Share of GDP belongs to Year-2014, with the exceptions of China LABOUR COST
where the data belongs to Year-2013.
‘SKILL INDIA’ INITIATIVE

GLOBAL MANUFACTURING
COMPETIVENESS
11
5 The Mission has been developed to create convergence
across sectors and States in terms of skill training activities.
Deloitte Touche Tohmatsu Limited in its report ‘Global
Manufacturing Competiveness Index, 2016’ identified which nations Seven sub-missions have been proposed:
300
offer the most competitive manufacturing environments globally. (i) Institutional Training, (ii) Infrastructure, (iii) Convergence,
India has ranked 11th in 2015 and is expected to improve by 6 (iv) Trainers, (v) Overseas Employment,
(vi) Sustainable Livelihoods, (vii) Leveraging Public Infrastructure.
positions to global rank 5th by 202032
MILLION
2015 2020
RANK RANK
32
Deloitte, Global Manufacturing Competiveness Index, 2016.
Note: Global Manufacturing Competiveness Index evaluates drivers that are key to
INDIA’S MANUFACTURING 33
http://www2.deloitte.com/global/en/pages/
manufacturing/articles/global-manufacturing-
YOUTH WILL BE TRAINED
company and country level competitiveness as well as identify which nations are COMPETIVENESS INDEX competitiveness-index.html BY 2022
expected to offer the most competitive manufacturing environments through the end of
this decade.
LOGISTICS SECTOR MODAL
LEAP FROGS PERFORMANCES
India’s Freight Logistics potential across Rail, Air and Port is
2016 RANK
underdeveloped and needs to evolve significantly considering the
35TH size and expected growth of India’s economy.
In the recently released World Bank bi-annual
Logistics Performance Index (LPI), India is
placed at 35th rank among 160 countries, an AIR FREIGHT & PORT CONTAINER
impressive 19 position jump from 54th position in
TRAFFIC
the 2014 report.
Introduction of a Single Window Interface for

Trade (SWIFT) and other recent reforms at 2014 RANK
Customs have resulted in improvement in the INDIA’S LPI
54TH
indicator. This is indeed a clear indicator of RANKING
improving regulatory climate and ease of doing
business and logistics efficiency.
LPI SCORES OF DIFFERENT COUNTRIES ACROSS YEARS
JAPAN
RAILWAYS, GOODS TRANSPORTED & RAIL LINES LENGTH
USA
CHINA
INDIA
BRAZIL
RUSSIA
Source: World Bank Database
Note: Logistics Performance Index (LPI) is an interactive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to
improve their performance. It is measured on the parameters like Customs, Infrastructure, International shipments, Logistics quality and competence, Tracking and tracing and Timeliness. Source: World Bank Database for
the year 2016. Source: World Bank Database. Source: World Bank Database
INVESTMENT CLIMATE IN INDIA
RETURNS ON INVESTMENTS INCREASING INVESTMENTS IN INDIA

WHEN TO
WHY INVEST India has the good potential to give a higher returns on investment INVEST IN India has also overtaken China as world’s top greenfield foreign
IN INDIA? compared some of the developed nations. India currently gives an direct investment (FDI) intentions announced with US$ 63 billion of
INDIA?
average yield of 6.5% on 10 Year government bonds which can be FDI in 2015. 34
deemed as risk free rate of return.
RISK FREE RETURN, INTENTIONS ANNOUNCED FOR

Q4, 2016*
RISK
FREE
GREENFIELD INVESTMENT, 2015.
RETURN
INVESTMENT INTENSIONS
Investor can safely assume a premium
over this risk free rate of return for any Private equity investors and overseas developers
investments in the country. The risk premium are already looking at opportunities to enter
would however, depend on the various India’s industrial and warehousing sector taking
aspects of the project like location, size, advantage of this fact by investing in various
phase etc. Investing in India’s logistics and development projects.
manufacturing destination becomes the most
Investors from China, Japan and Korea in
logical destination for developed countries.
particular have shown a lot of interest industrial
India’s Government 10-year bond yield development projects
performance in last 10 years depicts a stable Source: http://www.investing.com/rates-bonds/
*Note: Risk free rate of return is an average of Q4, 2016 numbers for the countries considered. India’s Government 10-Year Bond
growth pattern and hence reliable investment Yield (%) has recently seen a downward trend.
34
Source: fDi Report, fDi Intelligence , 2016.
fDi Intelligence is a specialist division of The Financial Times Ltd.
climate. Disclaimer: ‘Greenfield investment’ is a form of foreign direct investment where a parent company builds its operations
in a foreign country from the ground up. The fDi data mentioned above are the global greenfield investment intentions
announced in 2015 and don’t necessarily show the actual investment implemented during the period.
• ‘Wanda Industrial New City’; Dalian • SUPA, Japanese Investment Zone

Wanda Group
• Chinese industrial Zone in Vadodara, Gujarat
• Industrial Parks by China Fortune Land Development
• Ascendas Singbridge exploring exploring multiple
INDIA - GOVERNMENT Company Private (CFLD)
portfolios of Industrial and Logistics Park across India.
10-YEAR BOND YIELD • Development of Smart Cities by ZTE
• Verdion exploring Industrial and Logistics market in
Corporation
TREND (2006-2016) India.
• Neemrana Japanese Investment Zone
Source: http://www.investing.com/rates-bonds/ • LOGOS looking for land for setting up logistics park
Note: The yearly yield data mentioned in the graph is derived from monthly yeild
historical data spanning from CY 2006 to CY 2016. • Mandal Becharaji, Japanese Investment Zone in India.
MANUFACTURING
SECTORAL
PREDOMINANCE
LUDHIANA
DELHI NCR
WHERE TO INVEST
IN INDIA FOR GANGTOK
MANUFACTURING? KANPUR/LUCKNOW
JAIPUR
PATNA
INDORE
AHMEDABAD
KOLKATA
NAGPUR
• Isuzu - USD 450 million - SriCity, Andhra Pradesh.
• General Motors – USD 1 Billion – Talegaon, Maharashtra. MUMBAI
AUTOMOBILES & PUNE
• Honda Cars - INR 1,380 Crore in Gujarat and Rajasthan.
ENGINEERING • Suzuki Motors to invest INR 8500 Crore in Gujarat.
• Ranult Nissan to invest INR 5000 Crore in Chennai. HYDERABAD
• Foxcom – USD 5 billion – Mumbai and Pune VIJAYAWADA

ELECTRONICS & • Videocon – USD 64 million - Punjab.
COMMUNICATIONS • Apple – USD 25 million – Hyderabad
• Oppo – INR 100 Crore – Noida BANGALORE CHENNAI
LIFE SCIENCES • RusanPharma – USD 14.8 Million – Kandla, Gujarat. Disclaimer: The map is not to scale and the
(PHARMA & BIO- • Indian Immunologicals – USD 44.4 Million – Pondicherry. KOCHI locations marked are indicative only.
TECHNOLOGY) • Sanofi SA – USD 69.4 million
MANUFACTURING
INVESTMENT IEMS IMPLEMENTED (2006 – 15) 35 IEMS FILED (2006 – 15) 35
PROPOSITION 36 • Mondelez International – USD 190 million – Andhra Pradesh
• Pepsi – USD 74 million - Maharastra North Zone East Zone South Zone West Zone North Zone East Zone South Zone West Zone
FOOD & FMCG
• ITC - USD 117.4 million – Medak, Telangana 11% 9% 18% 63% 6% 41% 21% 32%
• Amul – USD 733.6 million
INR 4.21 Lakh Crore IEMs Implemented in the span of INR 108 Lakh Crore IEMs Filed in the span of 2006-
2006-2015, indicates the Actual Investment Reported 35 2015, indicates the Proposed Investment 35
• Wayne Burt-GE Aviation - USD 25 million - Chennai
AEROSPACE • Wem Technologies Private Limited and Lockheed Martin -
Life Sciences
USD 93 million - Andra Pradesh Automobiles & Electronics & (Pharma Food & Heavy Ship Oil
Aerospace Apparels IT Locomotives Engineering
Engineering Communications & Bio- FMCG Industry Building refineries
36 Source: http://www.ibef.org/ technology)
The Investment details, derived from

announcements made by individual • JSW – USD 1.4 billion – Salboni, West Bengal
companies, are indicative, non- HEAVY • NMDC Ltd – USD 2.6 billion - Karnataka
comprehensive and not the actual INDUSTRY • General Electric and Alstom Transport - USD 5 billion -
investment made in the sector. Note: Industrial Entrepreneurs Memorandum (IEM) is an application filled by promoter for setting up manufacturing unit in the state. It happens in two parts. First is filling the
Patna intention to set up the unit and second is to note the establishment or implementation of the intended unit. IEMs Implemented are Actual Investment Reported and IEMs Filed
are Proposed Investments.
35 State wise break up of IEMS implemented by December 2015, DIPP.
PRIMARY
WAREHOUSING
LOCATION
AHMEDABAD
Growth Corridors
Changodar- Bhayala |
Sanand | Aslali- Goblej |
Kalol – Kadi
Warehousing Stock 2016
WHERE TO INVEST 112 MILLION SQ FT
IN INDIA FOR MUMBAI
LUDHIANA
For Grade A and Grade B Growth Corridors
WAREHOUSING?
for 8 Primary Locations JNPT and Uran | Palaspe
NCR DELHI Panvel | Mankoli | Vadpe
| Padga
LUCKNOW
JAIPUR PUNE
GUWAHATI
KANPUR Growth Corridors
Chakan | Nagar Road
PATNA
| Hinjewadi | PCMC –
AHMEDABAD Bhosari | Shirwal
INDORE
KOLKATA BANGALORE
GRADE A & GRADE B Growth Corridors
WAREHOUSE VAPI BHUBANESHWAR Hoskote | Hosur Road |
NAGPUR
Tumkur Road | Mysore
STOCK 2016 MUMBAI Road
PUNE
HYDERABAD
NCR DELHI
KOLHAPUR VIJAYAWADA Growth Corridors
EMERGING Gurgaon | Ghaziabad |
Rental Warehouse - 2016 Grade-A 17-25 21-28 18-22 20-35 19-22 18-30 12-22 12-20 WAREHOUSING Delhi | Sonipat
(INR/sq ft/month) Grade-B 11-16 11-21 11-16 16-25 10-28 12-28 10-19 11-19 LOCATIONS
BENGALURU KOLKATA
Ludhiana Growth Corridors
CHENNAI
Jaipur Uluberia to Dhulagarh |
COIMBATORE Dankuni (on NH 06) and
Patna
Old Delhi Road (on NH
KOCHI Kochi 02) | Kalyani
Y-O-Y WAREHOUSE Vapi
HYDERABAD
STOCK FOR GRADE-A Indore Growth Corridors
& GRADE-B (2014-2018) Nagpur Shamshabad | Uppal |
Kolhapur Medchal | Balanagar |
Mahabubnagar
Guwahati
Vijayawada CHENNAI
Growth Corridors
Kanpur/Lucknow Oragadum | MM Nagar |
Note: City wise warehouse (WH) stock of 2016 consists of Grade-A and Grade-B. It does not take into consideration the stock owned by government, ICD, FTWZ and captive Coimbatore Sriperumbudur | Red-
warehousing stock by manufacturing companies that are within or beyond their premises.The total warehouse stock constitutes the data for 8 focus cities - Ahmedabad, Chennai,
Bhubaneshwar Hills | Periyapalayam |
Bangalore, Delhi NCR, Hyderabad, Kolkata, Pune & Mumbai. The minor variation in the total WH figures are due to rounding off / decimal errors. Disclaimer: The map is not to scale and the locations
Note: Rental ranges are indicative only with variation / aberrations in select markets. Actual rentals would vary as per specifications provided in a specific property. marked are indicative only.
WAY FORWARD Key
Growth
Portfolio Drivers
Acquisition
Investment Models
The investment climate of the country has improved

significantly and is expected to improve further with
more and more transparency in the real estate domain. Turnkey INVESTMENT Sale Lease
The investors are exploring the 4 Investment Models for Development MODELS Back
their entry in the market; Simplification of taxation
regime to increase the
India is on growth path that is expected to put the efficiency of supply chain.
country among the top global economies. The drivers
of growth, if executed as planned, can rightly position
India to achieve the growth targets. Joint Venture Improving the ease of doing
Development business and making India a
Global Manufacturer.
GST Implementation
Make in India
Enriching the large workforce
Demonetization to meet the growing need of
the industry
Digital India Digitally empower
Government of India’s on 8 November 2016, announced the decision to cancel the legal tender character of INR 500 and INR 1,000 banknotes Government and
Although RERA is
with effect from 9 November 2016 and the issuance of new INR 500 and INR 2,000 banknotes in exchange for the old banknotes. This primarily targeted Citizen to embrace the
demonetization exercise is expected to have various impacts on the industrial and warehousing real estate captured below. for residential Industrial Revolution 4.0
Skill India Initiative
real estate, it is
probably the first
step towards
Impact on Warehousing Real Estate increase in Infrastructure Robust planning and
transparency in investments in infrastructure
real estate sector. setting the backbone strong
Use of Informal Increase in Rationalization of 100 Smart Cities
Cash to go Transparency Land Prices and
down Rentals Drive economic growth and improve
RERA (Real Estate the quality of life of people by
Regulatory Bill) enabling local area development
and harnessing technology,.
Gradual shift from Opportunities
Unorganized to to bring in more Demonetization
Organized Market Institutional Players
Will lead to favorable long
term impact on Industrial and
Warehousing asset class.
The manufacturing and logistics asset classes in India is definitely taking a northward turn and gradually becoming competitive globally. India’s
journey to becoming a developed economy of the world is all set on a path with many hurdles to overcome. Good governance, transparency,
modifications in regulatory regime, investment in infrastructure developments apart from others is definitely going to help to achieve the target.
JLL Industrial Services: Snapshots
Authors
Chandranath Dey
Associate Director & Head Industrial Consulting
chandranath.dey@ap.jll.com
+91 90999 71598 23.20+ million sq ft built 305+ transactions 102+ consulting work
up area transacted concluded delivered
Chandranath Dey joined JLL in May 2006. Based out of Ahmedabad,
Chandranath currently leads industrial & logistics consulting business
in India. His key experiences include formulation of business plan,
entry strategy formulation, business location advisory and site
selection studies for some of the largest Fortune 500 companies of
the world across multiple industrial sectors. Chandranath with more
than 10 years of consulting experience holds a bachelor’s degree in 920+ acres of land Team of 28
architecture, master’s degree in City Planning from Indian Institute of transacted personnel in 8 cities
Technology, Kharagpur and certification on Applied Finance from IIM,
Calcutta.
Ishita Kachru
Senior Executive, Industrial Consulting
ishita.kachru@ap.jll.com Services nearly 43
+91 7043140555 Cities in India
Ishita joined JLL in Feb 2016. Based out of Ahmedabad, Ishita is

currently assisting industrial & logistics consulting business in India.
She is involved with projects pertaining to feasibility studies, business
location consulting, city profiling, real estate advisory and other
property development related research. Ishita with more than 2 years
JLL Industrial Services: Service Offerings
of experience holds a bachelor’s degree in architecture, Masters‘
degree in City Planning from CEPT University.
For information on Industrial Services please contact
Feasibility & Market Business Location Land Acquisition / Project / Equity

Study Advisory Disposal partner Search
Nirav Kothary N Srinivas
National Director, National Director,
Industrial Services Industrial Transactions
nirav.kothary@ap.jll.com srinivas.n@ap.jll.com
+91 79 4015 0015 +91 98454 45495
Business Plan Supply Chain Lease Acquisitions Individual Asset &

& Entry Strategy Consulting – Ready Built & BTS Portfolio Acquisition
Formulation / Disposal
About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking
increased value by owning, occupying and investing in real estate. JLL is a Fortune 500 company with, as of December 31, 2015, revenue of
$6.0 billion and fee revenue of $5.2 billion, more than 280 corporate offices, operations in over 80 countries and a global workforce of more than
70,000. On behalf of its clients, the company provides management and real estate outsourcing services for a property portfolio of 4.0 billion
square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. As of September
30, 2016, its investment management business, LaSalle Investment Management, has $59.7 billion of real estate assets under management.
JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com
JLL has over 50 years of experience in Asia Pacific, with 36,000 employees operating in 94 offices in 16 countries across the region. The firm
won 15 awards at the International Property Awards Asia Pacific in 2016 and was named number one real estate investment advisory firm in
Asia Pacific for the fifth consecutive year by Real Capital Analytics. www.ap.jll.com
About JLL India
JLL is India’s premier and largest professional services firm specializing in real estate. With an extensive geographic footprint across 11 cities
(Ahmedabad, Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad, Kolkata, Kochi, Chandigarh and Coimbatore) and a staff strength of over
8500, the firm provides investors,
developers, local corporates and multinational companies with a comprehensive range of services including research, analytics, consultancy,
transactions, project and development services, integrated facility management, property and asset management, sustainability, industrial,
capital markets, residential, hotels, health care, senior living, education and retail advisory. The firm was awarded the Property Consultant of
the Decade at the 10th CNBC-Awaaz Real Estate Awards 2015 and the Best Property Consultancy in India at the International Property Awards
Asia Pacific 2016-17. For further information, please visit www.joneslanglasalle.co.in
About JLL Industrial Services, India
With over 150 man-years of experience in working with high-profile industrial & logistics organizations across India, the team provides industrial
consultancy and transaction advisory for many of the Fortune 500 companies of the world. JLL’s integrated industrial services team is well
trained to deliver seamless solution to determine optimal long term real estate solutions for its clients. The team employs a multidisciplinary
approach towards utilizing the capabilities of Jones Lang LaSalle’s world class suite of industrial services, to develop real estate strategies
linked to clients’ core business objectives.
Jones Lang LaSalle Property Consultants (India) Pvt Ltd © 2017. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation
or warranty is made to the accuracy thereof.
32 INDIAN MANUFACTURING & LOGISTICS: ON A ROLLER COASTER RIDE!

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Indian Manufacturing & Logistics:

On a Roller Coaster Ride!

INDIAN MANUFACTURING & LOGISTICS: ON A ROLLER COASTER RIDE! 1

INDIA GDP MANUFACTURING SECTOR

India’s GDP is projected to grow at a CAGR India’s share in World GDP to

to other BRIC economies and

Global Infrastructure Investment

STRONG INFRASTRUCTURE BACKBONE India’s domestic aviation market grew at

DADRI Ministry of Railways is developing (WDFC) (EDFC)

VADHAVAN SAGAR ISLAND

Japan emerged as the first Asian

Post 1978, economic reforms like

After the economic crisis of 1991,

India 2035 Digital India vision

GST subsumed the complex tax structure including Replaced the

INDUSTRIAL REVOLUTION ARTIFICIAL DIGITALIZATION

Beginning of 20th Century Industrial Revolution 4.0

Strong Manufacturing Sector in India.

‘SKILL INDIA’ INITIATIVE

Introduction of a Single Window Interface for

LPI SCORES OF DIFFERENT COUNTRIES ACROSS YEARS

Source: World Bank Database

RETURNS ON INVESTMENTS INCREASING INVESTMENTS IN INDIA

RISK FREE RETURN, INTENTIONS ANNOUNCED FOR

• ‘Wanda Industrial New City’; Dalian • SUPA, Japanese Investment Zone

• Foxcom – USD 5 billion – Mumbai and Pune VIJAYAWADA

The Investment details, derived from

The investment climate of the country has improved

Ishita joined JLL in Feb 2016. Based out of Ahmedabad, Ishita is

For information on Industrial Services please contact

Feasibility & Market Business Location Land Acquisition / Project / Equity

Business Plan Supply Chain Lease Acquisitions Individual Asset &

About JLL India

About JLL Industrial Services, India

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