India’s logistics and supply chain sector is undergoing a big change as two moves by the government — Goods & Services tax (GST) and infrastructure status to the sector — have prompted many companies to invest more in the logistics sector. “The industry has one common wish list from GST: one market, seamless flow of goods to help businesses focus on real cost optimisation in their supply chain, and eventually lower their transaction cost,” said R.S. Subramanian, India head of DHL Express, the world’s biggest international express service provider by volume. Kishore Biyani, founder of Future Group, said supply chain and logistics are the most important backend aspects of the group’s overall business, and their importance has only increased in the past one year. Now, the heads of group companies’ logistics arm are a crucial part of every managerial decision that the group takes, something that didn’t happen earlier. The government conferred infrastructure status to the logistics sector on November 21, which means any more investment in infrastructure — like warehouses and cold chain storage — would get cheaper financing from banks. “Now, the companies that build warehouses and cold chains will get loans at 2% lower interest rate than what’s prevalent. This will decrease their costs and ultimately have a positive impact on the rentals 3PL (third-party logistics) companies like us are paying for leasing that infrastructure,” said Anshuman Singh, chairman of the Warburg Pincus backed Stellar Value Chain solutions. He, however, said the government still needs to attack the e-way bill, the complicated digital bill that is being planned to replace the paper bills in these operations. Industry players and state governments have been raising concerns on the new bill, prompting the government to postpone its implementation to April 1 next year.

(Source: ET Bureau, December 11, 2017)