UP vs Haryana:Comparative analysis of warehousing potential

Anant Jain*

The warehousing sector forms the backbone of the distribution of goods in an economy. A strong economy usually has a strong logistics sector to ensure that the goods and services produced and imported are distributed to the end users. Owing to modernisation and economic growth and reforms, a surge is expected in the warehousing sector. Primarily, the growth in e-commerce, improved infrastructure and the implementation of the GST is responsible for this surge. The e-commerce market has seen exponential growth in the recent past and is expected to reach a value of $200 billion by the year 2026. This growth, coupled with the implementation of GST has created excessive demand for large, integrated warehouses. In the pre GST era where different states had different tax rates, companies used to prefer having small warehouses in every state to plan paying taxes in a manner such that they pay lesser taxes according to the tax rates in various states. But the implementation of the GST means that corporates would focus on more organised warehousing in strategic locations. They would prefer larger warehouses that would lower the average costs and enable them to improve technology and efficiency. The government policies are also supportive, enabling authorised and planned growth in the warehousing sector.


There is definite demand for warehouses in Delhi-NCR, it being one of the most densely populated and central regions of India. Land is available on the outskirts of Delhi in both Uttar Pradesh and Haryana. Recently, both the governments have made policies promoting the warehousing sector in their respective states. However, one or two factors can play a major role in determining where the market would develop in the near future.


While the growth in e-commerce and the implementation of GST have set the platform for the expansion of logistics and warehousing, the deciding factor is the inauguration of the Eastern and Western Peripheral Way.A sizeable part of land is available in areas where these two expressways intersect the national and state highways. Earlier, due to poor road connectivity, this land was ignored by companies involved in third party logistics and warehousing despite being within 50 km from the most densely populated regions of NCR. The warehousing industry has large firms in Delhi-NCR. Such firms can compensate on high costs if they are getting proper connectivity. These expressways have ensured that all regions where land is available for warehousing purposes are connected to airports, railway stations and regions of NCR where consumers are available. Thus, pieces of land on all intersections of the expressway with national or state highways can now be used for warehousing purposes.


The transportation cost of transporting goods to the city and from airports and railway stations differs slightly at different intersections. Since, Delhi is an inland city, warehousing companies are primarily concerned with the distances from the airport and form the railway station. Compared to the intersections in Uttar Pradesh, the intersections in Haryana are closer to the international airport. There are primarily four ICD railway stations around Delhi from where goods are dispersed. These include Dadri, Loni, and Ballabhgarh and Tughlabad. The distance of each intersection from these key locations varies. Some intersections like Dadri have an important railway station right next to them, while intersections like Sankhol don’t have any important railway station in their proximity. These differences in transportation cost aren’t significant because more or less, every intersection is near the airport or some important railway station. Also,multi-national companies requiring warehouses are primarily concerned with quality of connectivity of a particular region. They are generally prepared to pay the insignificant extra transportation cost of a few kilometres provided that the connectivity is not compromised on.


The rent for a warehouse would be more or less constant, considering the insignificance of transportation cost. Thus, the return on investment for using a warehouse would be the highest in the region where the land cost is the lowest. Therefore, one would expect the industry to develop in regions with the lowest land cost. However, certain shortcomings in the government building by-laws prevents this from happening.  Land prices are comparatively lower in some parts of Uttar Pradesh, but the government by-laws are such that the warehousing industry is expected to prosper in Haryana.


Both governments recognise the potential of growth in the logistics sector in the respective states, and have come up with many incentives to meet the long-term objective of developing competitive logistics infrastructure in the State. These incentives include various forms of interest subsidies, exemption from various type of duties like electricity duty, stamp duty etc.


The Baghpat intersection has a significantly lower land cost than all other intersections in Uttar Pradesh, and most of the intersections in Haryana. However, on surveying the landowners, most of them didn’t seem interested at all in constructing a warehouse on their land. Lack of knowledge about the new government schemes is definitely one of the reasons behind this, but the major reason can be attributed to the red-tapeism in the implementation of the modified government by-laws, specifically the one regarding maximum ground coverage. Though the maximum permissible ground coverage has been amended to 60% in both the policies, it has only been implemented by the local authorities of Noida in UP, and by the local authorities of all districts in Haryana. The loss due to red-tapeism can be illustrated by using a numerical example.


Consider a 5-acre piece of land at different intersections in Uttar Pradesh and Haryana.

The following table illustrates the return on investment on different intersections at Uttar Pradesh:


Intersection Land cost Ground coverage Construction Area Construction Cost Total cost Rent Return on


Baghpat 1102.8 40% 87120 1125.9 2228.7 194.25 8.7%
Dadri 1689.6 40% 87120 1125.9 2815.5 194.25 6.9%
NH-24 3237.6 40% 87120 1125.9 4363.5 194.25 4.5%
Greater Noida 2023.5 60% 130680 1688.8









The following table illustrates the return on investment on different intersections in Haryana:


Intersection Land Cost Ground coverage Construction Area Construction Cost Total Cost Rent Return on Investment
Manesar 2000 60% 130680 1688.8 3688.8 291.4 7.9%
Sankhol 1750 60% 130680 1688.8 3438.8 291.4 8.5%
Kharkhoda 1750 60% 130680 1688.8 3438.8 291.4 8.5%
Badhsa 1250 60% 130680 1688.8 2938.8 291.4 9.9%
Tauru 1000 60% 130680 1688.8 2688.8 291.4 10.8%
Sonipat 2023.5 60% 130680 1688.8 3712.3 291.4 7.8%


Note: The data for the land cost and construction cost was collected by interviewing the land owners of various intersections.

All amounts are in Lakhs INR

Construction area is in square feet

As supported by the above statistics, the warehousing industry is expected to grow in Haryana because of the lucrative return on investment that companies would get. The UP government plans on making Dadri the central hub for warehousing, but till the time the amended government by laws, specifically the one regarding ground coverage, are not implemented by local authorities, logistics centres would be established in Haryana. In fact, construction of warehouses has been initiated in intersections like Tauru and most of them are nearing completion. Governments are coming up with incentives such as increasing the Floor Area Ratio(FAR). The policy makers must realise that increasing the FAR is not a viable solution in the warehousing sector. The size of most warehouses is standardised and people might opt for the construction of this standardised single storey size warehouse even if they have the option of the increased FAR. Increased FAR is a viable solution in the case of multi-storey buildings. However, increasing the ground coverage would be a better solution for the warehousing sector.

Another thing to keep in mind is that warehousing doesn’t require land right next to the highways unlike restaurants and hotels. One can also safely assume that land prices are halved in the interiors, and this land can be used for warehousing. However, the connectivity between the interior land and the highways varies at different places. It is better in UP in certain places while better in Haryana in the others.

As shown in the following tables, warehouses in the interior would be profitable for landowners. The data clearly represents the higher return that landowners would get on their land in the interiors.


Intersection Land cost Ground coverage Construction Area Construction Cost Total cost Rent Return on Investment
Baghpat 551.4 40% 87120 1125.9 1677.2 178.1 10.9%
Dadri 844.8 40% 87120 1125.9 1970.7 178.1 9.0%
NH-24 1618.8 40% 87120 1125.9 2744.6 178.1 6.5%
Greater Noida 1011.7


60% 130680 1688.8 2700.5







Intersection Land Cost Ground coverage Construction Area Construction Cost Total Cost Rent Return on Investment
Manesar 1000 60% 130680 1688.8 2688.8 291.4 9.9%
Sankhol 875 60% 130680 1688.8 2563.8 291.4 10.4%
Kharkhoda 875 60% 130680 1688.8 2563.8 291.4 10.4%
Badhsa 625 60% 130680 1688.8 2313.8 291.4 11.5%
Tauru 500 60% 130680 1688.8 2188.8 291.4 12.2%
Sonipat 1011.7 60% 130680 1688.8 2700.5 291.4 9.9%


Note: All amounts are in Lakhs INR

Construction area is in square feet

The area of the land considered is 5 acres

Thus, both states should aim at improving the connectivity of the interior land. The improved connectivity can be a stronger monetary incentive than the subsidy incentives.

Warehouses can also be constructed in areas other than the intersections of the Eastern and Western Peripheral Way provided that service roads are inaugurated on the expressway. Inaugurating a service road and improving the connectivity between interior land and the highway would have a similar effect on the logistics industry.

Both the governments have framed elaborate policies and these can only be utilised if they are supported by the required infrastructure, and properly implemented by local authorities. At the moment, the potential of growth in the warehousing sector is tilted in Haryana’s favour.

(The author is an independent analyst)*

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