The prospects for the material handling equipment sector in India look bright with the country all set to emerge as a key market for the segment. The article explores various aspects, like government reforms, the growing thrust of technology and more, that are helping in the evolution process of the MHE sector in India.
According to Ernst and Young India, the size of the Indian warehousing industry is pegged at about ₹560 billion (excluding inventory carrying costs, which amounts to another ₹4,340 billion). The Indian MHE market witnessed a growth of around 20% on a year-on-year basis in 2017, which doubled in 2018 to around 40 per cent. The market for MHE, such as forklifts, stackers and reach trucks, is estimated to grow at a CAGR of 10 % from 2016 through 2020. With global industry moving towards Industry 4.0 & advancement in sectors such as automotive, the material handling equipment sector will continue to flourish.
The challenges associated with setting up warehouses in India – acquisition of land for setting up vast warehouses is a major concern which has been aggravated by shrinking land availability – is making retailers go vertical. Businesses are being forced to search for vertical solutions for storage of cargo, like palletised racking and retrieval, which makes it necessary to have automated storage and retrieval equipment. Warehouses would ideally require forklift vehicles, dock levellers, pallet trucks and tow trucks which portend good news for the MHE players.
The changing face of India
A young and aspirational workforce averse to performing menial jobs is, in part, fuelling the demand for MHE. The low threshold for manual labour with increasing thrust on automation and digitisation has accelerated the growth of the MHE sector. Another critical factor that has given the MHE business a shot in the arm has been the government of India’s decision to implement the Goods and Services Tax (GST). The introduction of GST has been a crucial piece of reform for the manufacturing and goods aggregation industry as it has facilitated the consolidation and construction of warehouses and distribution centres.
Unlike in the past when companies with PAN-India operations were forced to set up warehouses across the country to comply with the local tax regulations, post-implementation of the unified tax regime, companies are better equipped to create bigger and better warehouses but in far less numbers.
Accent on technology
To capitalise on the opportunities, significant players in the MHE sector have already introduced a slew of new product solutions guaranteeing a manifold improvement in efficiency, performance and productivity. Forklifts with electronically synchronised powerful twin traction motors promise to change the customers’ perception of forklifts. With a reduced turning axis, it eases navigation even along the narrowest bends. A robust motor-gearbox combination enables these forklifts to climb up to 21% gradient and travel at a top speed of 14kmph, ensuring robust performance.With the emergence of Lithium-ion (Li-ion) batteries, carrying an extra set of replaceable batteries during multi-shift operations, is redundant. Features including fast and opportunity charging ensure that cells don’t need to be swapped when they run out of charge. Since they do not use lead and acid, they provide more power through green technology.
Smart charging solutions further add muscle to equipment. These are designed to deliver high charging proficiency and reduce the energy cost. Adaptive charging technology helps to extend battery life while keeping the business in motion. There are also one-charger-fits-all devices that come with the provision of scheduled charging and data recording.Wet disk brakes offer unparalleled performance for 6000 hours with no maintenance whereas ordinary brakes demand maintenance after every 1000 hours. Designed to achieve effective braking even during extensive operations and in severe conditions, it reduces operator fatigue as it involves lesser effort in braking.
The signs of a positive transformation are already visible. Various sectors, such as auto, capital goods, food & beverages, paper and construction, are expected to grow between 6 and 15% annually over the next three years. According to estimates, investment in warehousing can provide returns ranging between 12 to 20% annually.
However, to optimally maximise the opportunities, MHE players will have to consolidate and provide innovative solutions to move into high gear of growth. India does not have a standard load-carrying policy for manual labour, which encourages businesses to pile employees engaged for such work with heavy loads. Lack of palletisation at the factories and warehouses is another issue. Automated material handling is not possible without proper palletisation and stacking of goods. This again encourages businesses to deploy manual labour to lift and shift discreet loads.
The much-awaited National Logistics Policy is expected to pave the way for standardisation and regulation of the logistics industry, which, in turn, will help in laying down standards for load handling. The policy also envisages bringing down logistics cost from the current 14% of GDP to about 9%. With reduced logistics cost, warehousing and transport players will be able to improve operational efficiencies by deploying automated equipment for stacking and shifting of goods. With exciting times ahead for the MHE sector, major players are gearing up to ride the next wave of growth for the industry.
Courtesy: Godrej & Boyce