“Tax reforms, GST and rising economy have put logistics industry on a fast track growth. Logistics market in India is expected to be worth US$ 307 billion by 2020, Mr. Ram Kripal Yadav, Minister of State for Drinking Water & Sanitation said at an ASSOCHAM event.
India spends around 14.4% of its GDP on logistics and transportation as compared to less than 8% spent by the other developing countries. According to the 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.
Recently, the government has also given infrastructure status to logistics sector, covering cold chain warehousing facilities, a move that is likely to attract more funding at competitive rates for these segments. The major boost to logistics market comes from the ongoing infrastructure projects, increasing customer demand from the tier II and tier III cities, which is being further fuelled by the icreasing popularity of online shopping. Also, the country’s air cargo sector is projected to grow at over 9% in the next few years as the regional connectivity scheme would help in the continued growth of the air cargo sector.
Logistics Sector, wich accounts for nearly 14% of the GDP, could see savings to the tune of USD 200 billion annualy on implementation of GST, wich will ensure faster movement of goods and less idle hours, say experts.
In the coming years, The Indian Logistics Industry is expected to grow by 9-10% per annum over the medium term and at CAGR of 16% on an average. The border check posts have been removed even as states await electronic waybills, wich will make truck movement easier. The e-way bill on GSTN (Goods and Services Tax Network) is expected to be soon and will aid movement of trucks.
According to the study, access to cheap capital should be made available to Logistics Service Providers for investments in infrastructure, enabling them to extend longer credit periods to their clients and supplementing their working capital. The goverment should create a uniform tax structure and do away with multiple check points and documentation requirements, which would lead to speedier delivery of cargo.
The growth of the Cargo and Logistics Industry will not contribute to the GDP, but will also generate employment opportunities. For sure Logistics Industry in India is in for an unprecedented growth chart and it will continue to grow in the years to come.”
Article by FEI Cargo Ltd. (only for ALN members)