GST and Make In India Boost for Indian Logistics Industry

GST and Make In India Boost for Indian Logistics Industry
19/08/2017 , by , in ALLIED

Indian Government’s emphasis on Make in India, introduction of simplified tax structure through GST and other manufacturing initiatives have given a boost to domestic production and the effects can be seen in logistics industry as well. GST and Make In India Boost for Indian Logistics Industry. Digitization of solutions and online freight services has seen a rapid rise in past couple of months. Such enhanced services provide visibility across the supply chain and help in making the industry more organized and system oriented. Technological advancements through automation of storage and retrieval systems in warehouses and transportation, replacement of bar coding system with RFID (radio frequency identification) as well as the use of GPS for real-time tracking of goods in transit are becoming the norm.

According to the ‘Indian Logistics Industry – Growth Insights and Forecast to 2020’ study, investments in infrastructure development across all modes of transportation, relaxed foreign direct investment regulations, implementation of GST, and increased technology adoption are altering the Indian logistics industry.

The increasing influx of international logistics service providers (LSPs) are prompting third-party logistics (3PLs) and domestic LSPs to expand their footprint and focus on transportation service, warehousing and freight forwarding services. LSPs are leveraging Big Data and cloud-based application platforms for better order fulfilment and shipment tracking. This will open up partnerships opportunities, thereby providing domestic logistics companies the access to modern technologies used by their foreign partners. Hence the logistic sector in India will greatly benefit from the development of transportation and logistics-related infrastructure, such as dedicated freight corridors, logistics parks, free-trade warehousing zones, port modernization, and container freight stations.

“In addition to riding the digital wave, logistics companies in India are strategizing for the transition from indirect taxation to goods and service tax (GST). The simplified tax structure will benefit the warehousing industry and reduce logistics costs by up to 2.5%. This tax reform, along with land and labor market reforms, will improve the efficiency of both transportation and freight forwarding”, says Senthil Kumar Subbiah – Research Analyst, Supply Chain & Logistics Transformation Practice, Frost & Sullivan.

The modernization of logistics infrastructure and government support will go a long way in advancing the Indian logistics industry.

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