The Indian warehouse automation market (henceforth referred to as the market studied) was valued at USD 86.2 million in 2020. It is expected to reach USD 512.2 million by 2026, registering a CAGR of 26.4% over 2021-2026 (henceforth referred to as the forecast period).
- The warehousing property segment is emerging as a significant opportunity for investors. However, the COVID-19 lockdown has led to a considerable slowdown in the warehousing industry, with both investment activity and occupier leasing being subdued in Q1 2020. This period witnessed only one investment deal in the Indian warehousing sector, worth USD 54 million. Economists worldwide have forecast India's GDP growth to slow down considerably in 2020 due to the COVID-19 lockdown, affecting businesses and reducing their aggregate demand for warehouses. However, in 2021, the IMF projects India's GDP to increase by 11.5%, and this factor is expected to impact the market positively.
- India's warehousing industry is undergoing a significant shift, keeping pace with the emerging manufacturing sector and the vast logistics industry. With the implementation of the goods and services tax (GST) and the rising real estate investments, the warehousing industry is expected to benefit considerably.
- GST may ensure that India will see consolidated large-space central warehousing parks instead of the current scattered, standalone facilities. This is expected to enable the industry to increase investments in large warehouses and modernize these facilities with automation technologies.
- For instance, the e-commerce giant, Amazon, which has committed an investment of USD 5 billion in the Indian market, is investing in automated warehouses across India. It set up multiple new warehouses to cater to various categories. Amazon is among the first few companies in India that experimented with and adopted robotics in their warehouses. Its Kiva robot engages in picking and packing process capabilities at large warehouses. The usage of such robots brought a change in perception and made robotics and automation coexist in the warehousing sector.
Key Market Trends
Healthcare Expected to Hold a Major Share
- According to the IBEF report in the Indian Pharmaceutical Industry, published in November 2020, India was the largest provider of generic drugs globally. The Indian pharmaceutical sector caters to over 50% of the global demand for various vaccines, 40% of the generic medicine demand in the United States, and 25% of all medicine in the United Kingdom. The pharmaceutical exports from India stood at USD 16.3 billion in FY 2020. Pharmaceutical export includes bulk drugs, intermediates, drug formulations, biologicals, ayush and herbal products, and surgical goods. Such data showcases the massive landscape of the Indian pharmaceutical industry, which requires the automation of the warehouses in the supply chain for efficiency.
- There is a growing need for increased output while improving operational efficiency in the pharmaceutical industry. Maintaining a high quality of products and safety standards is creating a significant demand for automation in the healthcare industry. As a result, there is a parallel growth of warehouse automation in the healthcare industry, as these systems facilitate the availability of the required products promptly, with minimal human interaction, thus enabling the prevention of contamination during the drug manufacturing process.
- Also, the requirement of samples. the tracking of their lot numbers, and recording of their serial numbers, along with the strict timeframe demands, increased security demands, and strict confidentiality are prevailing as the significant factors increasing the adoption of warehouse management software and robotic systems. Some typical solutions include the areas of receiving, storage, put-away, replenishment, consolidation, order packing, and truck loading. The various load types of the pharmaceutical and healthcare markets, such as vials, strips, blisters, cartons, totes, poly bags, drums, and pallets, are handled and conveyed.
- The region is witnessing significant expansion activities in the pharmaceutical and healthcare warehouse segment. For instance, in August 2020, West Pharmaceutical Services announced the opening of its warehousing operations in Chennai, India.
Exponential Growth of E-commerce Industry in India Driving the Market
- The e-commerce boom in India has benefitted several industries in India, especially the supply and logistics sector, where data science is applied heavily to shipment tracking. Now, with the continued rise of online shopping and changing buyer expectations, and the high level of speed and accuracy required in the delivery have spurred e-commerce companies to find a faster way to reach customers.
- The retail fulfillment paradigm shift sees a new dimension, with e-commerce giants competing fiercely to fulfill faster deliveries. That is where warehouse automation and control system sales are stimulating growth by boosting operational efficiency. Today, warehouse automation forms the backbone of e-commerce players in India, such as Amazon, Flipkart, and Myntra. For instance, the Noida-headquartered Falcon Autotech Pvt. Ltd provides its automated solutions inside the warehouses of such prominent e-commerce portals. Companies such as Amazon are not only acquiring large automated warehouses on lease, but they have also globally started acquiring a fleet of airplanes and warehousing robotic companies.
- Most offline traditional retail stores are expected to have an online version very soon, making the in-store shopping experience more holistic and ensuring that the lack of shelf inventory is made up by warehouse inventory, increasing their customer loyalty base in the process.
- Large-format wholesalers and offline retailers are stepping up and changing their efforts to serve customers online. They are building omnichannel models to meet the increasing demand for essential goods and groceries. The overall architecture of retail may be changed, with social distancing as a critical component. Customers were reluctant to go to places where there is not enough social distancing, or where hygiene standards are not perceivably available. This played a significant role in raising in the adoption of e-commerce in India.
The Indian warehouse automation market is growing rapidly. Thus, multiple foreign companies are making significant investments in this market. Further, the ongoing rise of e-commerce and the new innovation strategies of large and small enterprises are expected to drive market growth.
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1.2 Scope of the Study
4.2 Industry Attractiveness - Porter's Five Forces Analysis
4.2.1 Bargaining Power of Suppliers
4.2.2 Bargaining Power of Consumers
4.2.3 Threat of New Entrants
4.2.4 Threat of Substitute Products
4.2.5 Intensity of Competitive Rivalry
4.3 Market Drivers
4.3.1 Exponential Growth of E-commerce in India
4.3.2 Increasing Need for Better Inventory Management and Control
4.3.3 Implementation of GST
4.4 Market Restraints
4.4.1 Cheap Labor and Harsh Operating Conditions
4.5 PESTLE Analysis
4.6 Impact of COVID-19 on the Industry
6.1 By Type
6.1.1 Conveyor/Sortation Systems
6.1.2 Automated Storage and Retrieval Systems (AS/RS)
6.1.3 Mobile Robots
6.1.4 Warehouse Management Systems (WMS)
6.1.5 Automatic Identification and Data Capture (AIDC)
6.2 By End User
6.2.1 General Merchandise
6.2.3 FMCG/Non-durable Goods
6.2.4 Other End Users
7.1.1 Daifuku India Private Limited
7.1.2 Space Magnum Equipment
7.1.3 Godrej Consoveyo Logistics Automation Ltd (GCLA)
7.1.4 Kardex India Storage Solutions Private Limited
7.1.5 Armstrong Ltd
7.1.6 Falcon Autotech Private Limited
7.1.7 GreyOrange Pte Ltd
7.1.8 Addverb Technologies Inc.
7.1.9 Hinditron Group
7.1.10 The Hi-Tech Robotic Systemz Limited
7.1.11 Bastian Solution Private Limited
7.1.12 ATS Conveyors India Pvt. Ltd
7.1.13 Richfield Automation Ltd
7.1.14 Schaefer Systems International Pvt. Ltd
A selection of companies mentioned in this report includes:
- Daifuku India Private Limited
- Space Magnum Equipment
- Godrej Consoveyo Logistics Automation Ltd (GCLA)
- Kardex India Storage Solutions Private Limited
- Armstrong Ltd
- Falcon Autotech Private Limited
- GreyOrange Pte Ltd
- Addverb Technologies Inc.
- Hinditron Group
- The Hi-Tech Robotic Systemz Limited
- Bastian Solution Private Limited
- ATS Conveyors India Pvt. Ltd
- Richfield Automation Ltd
- Schaefer Systems International Pvt. Ltd