How to Participate in Warehousing Tender: A Comprehensive Guide

The Warehousing Sector in India is witnessing an unprecedented boom, driven by a significant shortfall in storage capacity for food grains and other agricultural produce. For individuals and businesses interested in tapping into this lucrative opportunity, understanding the intricacies of participating in warehousing tenders is crucial.

Whether you own suitable land, are in the construction business, want to invest in the warehousing sector, seek passive income, or are interested in the Preservation, Maintenance, and Security (PMS) business, this guide will provide you with essential information on how to get involved.

Storage Demand in India :

Based on the Food and Agriculture Organization Statistical Data 2021, India’s total food grain production stands at 311 million metric tons (MMT). However, the current storage capacity is only 145 MMT, leaving a shortfall of 166 MMT—47% of the storage capacity is missing. This gap highlights the increasing demand for warehousing solutions in the country.

Types of Warehousing Tenders :

1.PEG (Private Entrepreneur Guarantee Scheme): Offers 5/7/10 years guaranteed agreements for constructing new covered godowns for storage.

2. PWS (Private Warehousing Scheme): Involves rehiring already constructed godowns for 2 or 3 years.

3. AMP (Assets Monetization Policy): Invites tenders for constructing godowns on Food Corporation of India’s (FCI) own land.

4. SILO: Provides a 32+ years guaranteed agreement for constructing steel vertical storage facilities, with high demand prospects in the future.

Warehousing Service Modes :

1 Lease Only : Construct the godown and receive a fixed monthly rental income.
2 Lease with Services (PMS) : Along with constructing the storage facility, ensure the preservation, maintenance, and security of food grains.

Land Norms :

Land can be owned, on a registered lease deed, or on a willing-to-take basis.
Must be within an 8-15 km radius of a grain market.
Connected with at least a 22-foot road.
Should not be near a petrol pump, brick industry, or any polluting industry.
Should not have high extension electricity wires or be in a flood zone.
Must have an appropriate land level without water canals crossing the land.

Land Requirements :

For Constructing Godowns:
– 5000 MT: 2 acres
– Each additional 5000 MT: 1.7 acres
For Silo Projects:
– Capacity requirements range from 4 to 26 acres depending on the storage capacity (25,000 MT to 150,000 MT).

Net Worth Norms :

For silo tenders, the minimum net worth required is 25% of the project cost. This can be fulfilled by an individual entity or a consortium.
Net worth requirements for AMP tenders will be specified as per the tender documents.
.

Bidding System :

Technical Bid :- Submit all documents related to the applicant and land.
Financial Bid : Quote the rate the applicant seeks, either for lease only or lease with services. Typically, this will be specified per MT/per month.

Tender Allotment Process :

1. Technical Bid Evaluation: Includes site inspection and compliance with tender norms.
2. Financial Bid Opening: After qualifying the technical bid, the financial bid is opened and the tender is allotted to the lowest rate (L1).
3. Agreement Execution: An agreement is executed following compliance with tender norms.
4. Construction Period: Generally, 6 to 18 months as specified in the tender.

Covered Godown :

Standard Cost: Rs. 4000 to 4500 per MT
Lease Only Rate: Rs. 45 to 60 per MT/month
Lease with Services: Rs. 74 to 90 per MT/month
Payback Period: 5 to 6 years
Project IRR: 15% to 20%

Silo Tender :

Standard Cost: Rs. 9000 to 10000 per MT
Lease Only Rate: Rs. 1100 to 1300 per MT/year
Payback Period: 12 to 15 years
Project IRR: 12% to 15%

Subsidy Benefits :

Stamp Duty Refund
Refund of External Development Charges (EDC)
Interest Subsidy under Agriculture Infrastructure Fund (AIF)
NABARD Capital Subsidy
State-Specific Capital Subsidy

KIP Services :

Framing financial feasibility reports.
Tender filling and documentation.
Tie-ups with technical vendors for construction.
Banking support.
Subsidy filing and processing.

Warehousing Business Community :

Stay updated with the latest tenders, such as Pungrain, AMP, and upcoming silo tenders.

To Join Our Business Community :-https://pages.razorpay.com/subsidyupdates

Success Stories :

KIP has a proven track record in securing subsidies for warehousing projects, ensuring profitable and sustainable investments for their clients.

Conclusion :

Participating in warehousing tenders presents a significant opportunity for those with suitable land, construction expertise, or investment interest in the warehousing sector. By understanding the tender types, eligibility norms, and financial benefits, you can strategically position yourself to capitalize on the growing demand for storage solutions in India.

For, more information on this you are requested to contact our KIP subsidy helpline on Mail – sales@kipfinancial.com and contact Number- +918683898080

KIP Financial Consultancy Pvt. Ltd.

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