DHL Investing USD$130 Million In India
DHL's Indian arm plans to invest EUR€100 million (USD$129.4 million) via its supply chain division to build new warehouses and transport facilities in India as it positions itself to exploit the opening up of the retail sector.
"With government investments in infrastructure on the rise coupled with streamlining of regulatory policies, we are enthusiastic about the fast-paced growth in the logistics market," Paul Graham, chief operating officer of DHL's supply chain division for Asia told reporters at a news conference.
"We want to keep ahead of growth. We want to be ready when our customers want to expand."
Last month, India took the politically fraught decision of allowing foreign direct investment in its supermarkets.
The expectation is that this opening up will attract greater investment in India's poor supply chain infrastructure, which now results in huge wastage in the journey from the farm to retail shelves.
"The new retail legislation lays a huge emphasis on making India a sourcing hub and that is very important," said Graham, adding that the company was ready to bring its global retail logistics expertise to India.
DHL already offers express delivery, global forwarding and supply chain services in India.
DHL raised its 2012 profit outlook in August, bucking a weaker trend at US rivals UPS and FedEx, citing robust demand for its express delivery services in Asia.
Opening up the retail sector to the likes of Wal-Mart and Carrefour was part of a slew of policy announcements last month as Prime Minister Manmohan Singh's government rediscovered its reforming vim.
Also unveiled was a lifting of the bar on foreign investments in other sectors such as pensions, insurance and airlines, raising diesel prices and pushing for faster roll out of infrastructure projects.
Graham said DHL planned to add 5 million sq ft (465,000 sq m) of warehousing space, more than doubling its capacity from the current 4 million sq ft. The warehouses will be in Mumbai, Gurgaon, Delhi, Bangalore, Nagpur, Chennai, Kolkata and Ahmedabad.
The company operates a large free trade warehousing zone in the southern Indian state of Tamil Nadu which caters to the retail, energy, healthcare and automotive sectors, among others.
Graham said DHL would make further investments in four more free trade warehousing zones across India, in addition to the EUR€100 million announced now.
Vikas Anand, DHL's chief operating officer for the supply chain division, said the next such free trade zone investment would be outside the financial capital Mumbai.
He said the company would work through a tie-up with local partners to help with the tricky task of land acquisition for warehouses.
India has been trying to overhaul its century-old land acquisition law for several years to make it easier to secure land for industrial and infrastructure projects, but political opposition, including from its own ministers, has stalled the process.