Indian e-commerce companies to invest up to $1.9 billion on infra by 2020

According to a joint study by PwC and ASSOCHAM, total spend on warehousing and sortation centres could be as high as 3-6% of top-line revenues

Buoyed by the growing popularity of online shopping in India, the e-commerce market, which is expected to reach $20 billion by 2020, will see companies investing close to $2 billion in logistics, infrastructure and warehousing in the next six years, a study said today.

According to a joint study by consultancy firm PwC and industry body ASSOCHAM, Indian e-commerce industry will spend $950-1,900 million by 2017-2020 on infrastructure, logistics and warehousing.

"The total spend on warehousing and sortation centres could be as high as 3-6% of top-line revenues, which represents an cumulative spend of over $450-900 million of spend in warehousing till 2017-2020," ASSOCHAM-PwC study said.

The industry is expected to spend an additional $500- 1,000 million during the same period on logistics functions, leading to a cumulative spend of $950-1,900 million till 2017-2020, it added.

The study, Evolution of e-Commerce in India, estimates that over the next three to four years, there will be an addition of 7.5-15 million square feet of space in the form of fulfilment centres.

This indicates an addition of 6-12% to the space available in form of organised warehousing in India and almost 25-50% of all the incremental addition of consumption driven warehousing space in the same period, it added.

"The potential of sector and the likely liberalisation in form of FDI could be a vital factor in attracting significant investments resulting in better infrastructure and robust supply chains," PwC Director (Operations) Saurabh Srivastava said.

The growth of e-commerce industry has a huge potential in the country translating into huge gains for the manufacturing industry, infrastructure and jobs, he added.

"Size of the e-retail industry is poised to be $10-20 billion by 2017-2020," the study said.