Investment handbook on India-UAE collaboration in the logistics sector

A JLL-Invest India-UIBC report

February 07, 2024
  • Harshit Talreja
  • Priyanka Kumari
  • Pratyush Kumar

In this era of connected global trade and economies, the current times have witnessed several overtures that have directly and indirectly hindered it and demonstrated the need for alternatives. The India - UAE relationship has been strong since its inception, and trade ties between the two countries have grown from strength to strength, relying on geopolitical and human connections. In FY2023, trade between the two nations hit a historic high of US$ 84.5 billion. FDI from the UAE to India increased 300% to US$ 3.35 billion in FY23 from US$ 1.03 billion in FY22. Key agreements like the Comprehensive Economic Partnership Agreement (CEPA) and the positioning of sizeable multi-national collaboration projects such as India-Middle East-Europe (IMEC) stand testament to building on this relationship.

While energy and food security remain the primary base for trade between the countries, the bilateral relationship has more intricate bindings with investments from the counterparts in the two countries across sectors. Logistics is one such central area of interest for investors. Indian logistics sector particularly presents a unique opportunity as the segment continues to grow and improve, expanding its contribution to the country’s economic growth.

The logistics sector has witnessed major defining projects such as the large-scale development of MMLPs across India’s length and breadth, the development of greenfield and the modernisation of brownfield ports, airports, highways and expressways, railways, and waterways. Indian warehousing has witnessed a significant infusion of foreign investment and the stock has grown ~3X since 2016 to 354.1 million sq ft by Q3CY23 . What makes this growth interesting is the share of Grade A warehouses, which has increased from less than 30% to ~50% during the same period, demonstrating the breakneck speed at which India’s logistics sector is maturing. India’s total warehousing stock is expected to reach approximately 540 million sq ft by 20261. The increase in the share of Grade A spaces is attributed to the influx of investments made by institutional developers and an increasingly large footprint they have established in terms of the total market size.

Net absorption – India warehousing

This along with several government initiatives in the logistics sector presents a defining opportunity for investors to bet big on the Indian growth story, which is expected to contribute ~16% of the global growth. This report comes in at a time as a guidebook to interested investors, especially in the UAE to consider a long-term association of successful investments in India against a backdrop of a relatively stagnant global economy, focusing on opportunities in the logistics sector.

Download the report for a more in-depth understanding of the factors shaping the business case of investment opportunities in the Indian logistics sector.

1Indian warehousing stock here represents only Grade A and B warehouse spaces in the top 8 tier 1 cities of India (i.e.: Ahmedabad, Bengaluru, Chennai, NCR Delhi, Mumbai, Hyderabad, Kolkata and Pune) and excludes stock owned by the government, ICDs, CFSs, FTWZs and captive or long-term leased warehouses by industries/ manufacturing companies that are within or beyond their premises, government industrial estates/ parks, in-city warehouses, dark stores, cold storages

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