A Complete Guide to Warehousing Subsidies for Businesses

The commercial warehousing sector in India is experiencing rapid growth, fueled by structural reforms, improved infrastructure, and rising demand from industries and e-commerce. Recognizing this momentum, the state has introduced a comprehensive logistics and warehousing policy to promote development, lower logistics costs, and attract investment.

This policy provides a mix of financial incentives, subsidies, and operational support to boost warehousing as a key driver of economic growth.

The Driving Force Behind Warehousing Demand

The rising demand for modern warehouses is being shaped by several factors:

GST Impact: The introduction of GST has unified taxation across states, encouraging businesses to centralize operations in large-scale storage facilities.
Infrastructure Growth: Expressways, highways, and modern logistics corridors make goods movement faster and cheaper, enabling warehouse expansion in Tier-2 and Tier-3 cities.
E-commerce Boom: Online shopping and hybrid retail models require massive storage and fulfillment centers strategically located across the country.
Industry Recognition: Logistics has been granted “Industry” status by the state and continues to achieve high rankings in the LEADS Index (2018, 2019, 2023). The state also handles nearly 40% of India’s cargo, cementing its logistics strength.

Who Can Benefit?

Storage Users: Farmers, food grain storage operators, traders, and commission agents.
Industrial Units: Agro-based industries, food processors, and manufacturers of industrial goods.
Logistics Firms: Distributors, 3PL companies, transporters, and supply chain managers.
Investors & Developers: Builders, real estate agents, and investors looking to build warehouses for rental income.
Specialized Units: Packaging, sorting, grading, and processing facilities with value-added services.

Core Financial Incentives for New Projects

Capital Subsidy: 25% of Eligible Fixed Capital Investment (EFCI), capped at ₹15 crore.
Interest Subsidy: 7% on eligible term loans for 7 years, capped at ₹50 lakh per year.
Stamp Duty Refund: 100% reimbursement for eligible projects.
Electricity Duty Exemption: 100% exemption for 5 years.

Key Eligibility Requirements

Policy Period: Valid from 2021 to 2026, or until replaced by a new policy.
Minimum Investment: At least ₹1 crore fixed capital investment.
Operational Tenure: Units must operate for at least 10 years after availing benefits.
Scheme Cap: Total benefits from state and central schemes cannot exceed prescribed limits.
Warehouse Definition: Covers open or closed facilities for cargo storage, including bulk handling.

Frequently Asked Questions (FAQs)

Q1: What is the main purpose of the warehousing policy?

The policy aims to promote logistics development, reduce logistics costs, and attract investments by offering financial incentives, subsidies, and support to warehousing units.

Q2: Who can apply for warehousing incentives under this policy?

Farmers, traders, industrial units, logistics firms, investors, real estate developers, and specialized service providers like packaging or processing units can apply, provided they meet eligibility criteria.

Q3: What kind of financial support is available for new warehousing projects?

Eligible projects can receive a 25% capital subsidy (up to ₹15 crore), 7% interest subsidy (capped at ₹50 lakh per year for 7 years), 100% stamp duty refund, and 100% electricity duty exemption for 5 years.

Q4: What are the minimum requirements to qualify for incentives?

The project must have at least ₹1 crore fixed capital investment, operate for at least 10 years, and comply with state/central scheme limits.

Q5: How long is the warehousing policy valid?

The policy is effective from 2021 to 2026, unless replaced by a new policy. Eligible units must apply within this period to claim benefits.