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POLICY IMPACT – GST effect: India’s warehousing footprint to double in three years

The single-tax regime comes with the freedom to pick any part of the country for all your storage needs

An overhaul entrenched deep beneath the usual look and feel of imagination is taking shape in India’s warehousing sector. While cramped, ill-equipped storage units will make way for sprawling, high-tech and air conditioned facilities, the metamorphosis driven by the much-awaited roll out of the Goods and Services Tax (GST) Act is set to augur a new order in the industry dynamics.

POLICY IMPACT - GST effect

For starters, the country for the first time is available as one seamless market. Until now it existed like 36 mini markets. The tax norms for every truckload of goods shuttling across the diverse landscape changed at State boundaries. But the convoluted culture ends with the introduction of GST, touted as India’s biggest tax reform since independence. The sin gle-tax regime comes with the freedom to pick any part of the country for your storage needs.

    IMMEDIATE FRUITS

Halving of stockpile cost will be one of the immediate upshots of the move. Instead of having two warehouses in Mumbai and Ahmedabad, you could have one high-tech facility in between, say in Vapi, which could service both the markets.

The capacity of 25-odd warehouses across the national network could be efficiently managed by 5-8 hitech facilities at strategic locations. The gears are changing across the supply value chain. Better stock management, cutting-edge automation and improved manpower management are simultaneously taking shape. While cheap labour continues to compete with automation some logistics majors have begun talks with robotics firms. The rub-off effect subsequently reflecting in delivery timelines would complete the service cycle.

HUGE GROWTH POTENTIAL

India’s warehousing landscape is set to double over the next three years. Cur rently, India has approximately 100-110 mn sqft of leasable space in the organised warehousing sector in the top eight cities. Now, large tracts of unrecognised storage units scattered across the country would gradually become part of this changing topography. Commonly referred as godowns, the fringe players mushroomed in the shadow of the erstwhile tax regime.

Source : The Times of Group (Bangalore)

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Santosh Kenchaamba

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