The Indian Railways is looking to monetise land plots in smaller town and cities by leasing them to e-commerce companies for setting up warehouses. The Rail Land Development Authority (RLDA) under the Ministry of Railways with statutory authority for development of vacant railway land for commercial use for the purpose of generating revenue by non-tariff measures reportedly is in talks with Flipkart, the country’s biggest online retailer, and is soon expected to come out with an expression of interest.
Ved Parkash Dudeja, Vice Chairman, RLDA said that although the land parcels in tier II cities might not generate better commercial returns but it can be utilised for warehousing, adding that they have identified land within ten kilometres of main railway stations in these towns.
Dudeja stressed that in today’s era of same day delivery, e-commerce would like to have warehouse everywhere.
Walmart-owned Flipkart has been rigourously investing in the development of warehousing infrastructure, the company owns over a dozen warehouses across the country which help them reduce of delivery cycle times, particularly in big cities.
With smaller towns driving a bulk of e-commerce sales at considerably higher development levels relative to urban centres, analysts believe that providing warehouses or pick-up points in those areas may greatly help save logistics costs. However, it can only work if the companies like Flipkart utilise the railway network for distribution.
“Land is not an issue for e-commerce players who would rather rely on dedicated sellers and their facilities than invest in setting own warehouses. Such land parcels could work for bulk goods operators or manufacturers and not e-commerce players which have bandwidth issues of their own,” said a supply chain and consumer goods aggregator firm.
For a while now, the Railways have been seeking to monetise assets. In fact, recognising government’s focus on augmenting rail infrastructure and modernising existing stations as an enabler, Knight Frank says that the total retail opportunity at redeveloped railway stations is expected to reach $1.9 billion by 2030, from just $ 100 million in 2019