Can India Warehouse Its Way Around Near-Shoring?

Corporate Update

Can India Warehouse Its Way Around Near-Shoring?

India has come up with an intriguing answer to one of its biggest problems in the US market: distance.

The Parliamentary Standing Committee on Commerce, in its latest report on India-US trade relations, has recommended that the government work with industry bodies to establish government-subsidised textile warehousing hubs at major US shipping entry points.

The thinking is simple. Put Indian goods closer to American buyers. Hold ready-to-sell inventory in the US. Speed up delivery. Reduce dependence on intermediaries. Combine the warehouses with faster customs and green-channel facilities in India.

It sounds like a logistics idea. It could become something much bigger.

But there is a catch. A warehouse can solve distance. It cannot, by itself, solve demand, pricing, finance, product mix or market access.

And those questions need answers before India starts pouring money into warehouses.

The $10 million question

First, what does one warehouse actually cost?

Consider a hypothetical 100,000 sq ft US textile distribution centre. Current US construction benchmarks put warehouse construction broadly in the US$ 85-US$ 200 per sq ft range, depending on location, specification and complexity. That puts the building itself at roughly US$ 8.5 million - US$ 20 million for 100,000 sq ft.

And that is before land, financing, racking, forklifts, warehouse-management systems, security, IT, customs infrastructure and other fit-out costs.

Leasing is cheaper upfront, but it is hardly cheap.

Recent US warehouse rental benchmarks put average rents around US$ 9 per sq ft, with additional NNN expenses often adding another US$2-US$4 per sq ft.

So a 100,000 sq ft facility could mean roughly US$ 900,000 a year in base rent, potentially rising to US$1.1-1.3 million or more once common operating charges are included.

Then come labour, equipment, insurance, handling, customs compliance, software, utilities and last-mile distribution. And there is an even bigger number hiding behind all of this.

The inventory.

If that warehouse contains US$ 10 million worth of Indian textiles, someone has to finance US$ 10 million of merchandise sitting thousands of kilometres from the factory.

That could easily be more financially significant than the warehouse itself.

Who pays?

This is the first big hole in the proposal.

The government can subsidise the warehouse.

But who finances the stock?

The exporter?

The buyer?

A bank?

A logistics company?

An industry consortium?

And what happens when the goods don't sell?

For a large Indian textile company, carrying inventory in America may be manageable.

For an MSME exporter operating on thin margins and already struggling for working capital, it could be a completely different story.

The policy therefore cannot stop at subsidising warehouse space.

India would need to think about inventory finance, warehouse receipts, credit insurance, customs arrangements, insurance and inventory-risk sharing.

Otherwise, the country could end up subsidising buildings while exporters remain unable to fill them.

And then comes the uncomfortable question: pricing

The warehouse could make Indian exporters faster.

But could it make them weaker?

Imagine several Indian companies stocking similar basic garments in the same US hub. The American buyer knows the goods are already there. He also knows the exporter has already paid to manufacture, ship and store them. That changes the bargaining game.

The buyer can push: “You already have the goods in America. Give me your best price.” The exporter, meanwhile, has inventory to turn. The longer it sits, the more expensive it becomes.

So the warehouse could improve delivery power while reducing pricing power.

That is not necessarily a reason to reject the idea. It is a reason to be very careful about what goes into the warehouse.

Basic, repeat-order products could make sense: towels, bedsheets, T-shirts, uniforms, workwear, institutional textiles and other standardised SKUs with predictable demand.

Fashion-sensitive, seasonal or highly customised merchandise is a different proposition.

Nobody wants a warehouse full of last season's fashion.

India already has a few lessons

Interestingly, Indian companies have already been testing versions of this strategy.

Take Welspun. Welspun USA was established in 2000 with sales, design and marketing operations in New York and a distribution centre in Ohio. The company has built a substantial US-facing supply chain rather than treating America simply as an export destination.

Its Grove City, Ohio operation is particularly revealing.

Welspun already had a distribution centre there. In 2024, it announced a $12.5 million investment to retrofit the existing distribution centre with manufacturing capability, adding production of home textiles including towels, rugs and bedding. The move was explicitly designed to strengthen its North American presence and bring production closer to customers.

That is a significant lesson.

Welspun isn't merely asking: “How do we ship from India to America faster?”

It is asking: “What should we actually produce and hold in America?”

And there is another layer to the company's US strategy.

Welspun has also been building consumer and brand-side capabilities. In 2024, Welspun USA set up and acquired Christy Home Inc., with the company focused on trading Christy-branded home textiles in the US.

That is different from simply renting a warehouse. It combines brand, distribution, inventory and market access.

Indo Count offers another useful case study.

Rather than simply establishing a giant warehouse and filling it with Indian-made goods, the company has been buying its way deeper into the North American supply chain.

In 2024, its US subsidiary Indo Count Global acquired an 81% stake in Fluvitex USA, a Columbus, Ohio-based pillow and quilt manufacturer. The company had capacity for around 5 million pillows and 1.5 million quilts, with its location giving it distribution advantages across the US and Canada.

Barely a month later, Indo Count acquired 100% of Modern Home Textiles in Phoenix, Arizona. The facility had capacity to produce about 8 million pillows a year. Indo Count described the two acquisitions as a step towards building an integrated utility-bedding business for North America, with facilities on both the Midwest and West Coast.

That is a very different model from “send more containers to America”.

It is: Manufacture + distribution + local presence + market knowledge.

And Indo Count has gone further still.

The company acquired the US home-fashion brand Wamsutta, giving it access to a recognised American brand and a premium consumer position rather than relying entirely on an Indian manufacturing identity.

This is an important lesson for policymakers. Indian companies are not necessarily solving the US challenge by building warehouses. Some are buying distribution, manufacturing and brands.

China has gone much further

Now look at Alibaba.

Cainiao, Alibaba's logistics arm, has been building an overseas logistics network that goes far beyond storage.

Alibaba announced plans to expand Cainiao's overseas warehouse network from 30 warehouses covering about 1 million sq m to more than 2 million sq m. The objective was to allow Chinese SMEs to pre-stock goods overseas and fulfil a large proportion of cross-border orders within 72 hours in targeted markets.

By 2025, Cainiao said it had a network of more than 40 overseas warehouses across Europe, the US, Southeast Asia and Australia. Its proposition is not simply “we have storage space”. It combines warehousing with transportation, customs clearance and digital logistics.

That distinction matters.

China has built an export fulfilment ecosystem. India is discussing warehouses. The gap is important.

The warehouse is only one piece

There is another reason to think bigger.

The US already has sophisticated logistics infrastructure, including Foreign-Trade Zones and bonded warehouses that can allow eligible imported merchandise to remain under customs control and defer duty payment until the goods enter US customs territory for domestic consumption.

So India may not even need to build every warehouse itself.

Why not partner with existing US logistics operators?

Why not create an India-dedicated network inside existing 3PLs, bonded facilities and Foreign-Trade Zones?

Why spend millions building a new 100,000 sq ft facility if Indian exporters can access an existing facility at a fraction of the capital cost?

The government's money could instead be used to solve the more difficult problems: inventory finance, market intelligence, customs facilitation, digital order management, export credit and buyer connections.

And what about the American buyer?

This is another point that deserves scrutiny.

A US retailer gets a lot from Indian stock being held locally:

faster replenishment
shorter lead times
lower supply-chain uncertainty
smaller and more frequent orders
easier returns
potentially lower inventory requirements on the buyer's side.

All valuable.

But who captures that value?

If the American buyer gets all the benefits while the Indian exporter carries the inventory and financing risk, India may simply be subsidising a better supply chain for the buyer.

The policy has to ensure that at least part of the productivity gain comes back through better prices, larger orders or longer-term commitments.

Otherwise, speed could become another cost imposed on the exporter.

So, should India build the warehouses?

Yes, but selectively and intelligently.

The Committee's idea deserves serious attention. India does need to become closer to its customers.

But the real objective should not be: “Indian goods sitting in American warehouses.”

It should be: “Indian exporters becoming easier, faster and smarter suppliers to America.”

That requires much more.

It means identifying products with predictable US demand.

It means financing inventory intelligently.

It means linking warehouses to FTZs, bonded facilities and professional 3PLs.

It means digital inventory visibility.

It means faster customs.

It means reliable last-mile fulfilment.

It means understanding what American buyers actually want before manufacturing thousands of pieces.

And it means tackling the bigger competitiveness questions: tariffs, product mix, MMF capacity, technical textiles, scale, quality, compliance, sustainability, design, branding and buyer relationships.

The warehouse can solve one problem: distance.

It cannot solve all the others.

That may be the biggest lesson from Welspun, Indo Count and Cainiao. They did not build logistics networks simply to store products. They built them to get closer to the customer, control more of the value chain and respond faster to demand. That is the real opportunity for India.

Don't just put “Made in India” inside an American warehouse.

Build the supply chain that makes “Made in India” harder to ignore.

The Parliamentary Standing Committee on Commerce, in its latest report on India-US trade relations, has recommended that the government work with industry bodies to establish government-subsidised textile warehousing hubs at major US shipping entry points. The thinking is simple. Put Indian goods closer to American buyers. Hold ready-to-sell inventory in the US. Speed up delivery. Reduce dependence on intermediaries. Combine the warehouses with faster customs and green-channel facilities in India. It sounds like a logistics idea. It could become something much bigger.

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