Impact of GST on Logistics Industry

Logistics is considered to be the backbone of manufacturing and trading activities in the economy. It has a critical role to play for developing countries like India wherein consumption is growing and demand is always high. We can fairly assume that a well organized and mature logistics industry has the potential to leapfrog the “Make In India” initiative of the Government of India to its desired position.

In simple words, logistics can be considered as the movement of goods from its point of origin to the point of consumption. A well planned logistics and supply chain ensures delivery of right items in right quantities at the right time to the right place for the right price in the right condition to the right customer. And if not well managed, everything goes for a toss. The stakes remain high for both consumer and supplier.

So far, logistics players in India have been maintaining multiple warehouses across states to avoid CST levy and state entry taxes. Most of these warehouses are operating below their capacity and thus adding to their operational inefficiencies. However, once GST sees the light of the day, most of the current challenges of this industry will be a story of the past as India will become one single market wherein goods can move freely inter-state without any levy.

This will further bring warehouse consolidation across the country and we can witness mega logistic hubs and high investments in infrastructure wherein 100% FDI(Foreign has already been allowed.

As an outcome of GST, warehouse operators and e-commerce players have already shown interest in setting up their warehouses at strategic locations such as Nagpur, which is the zero mile city of India and is well connected throughout. We are sure to witness more transformations happening as we go forward. GST holds exciting time for all the stakeholders, be it logistics operator, e-commerce players and the end consumer. It won’t be unfair to say that GST will disrupt the existing ecosystem and will make it more efficient and competitive going forward.

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