The shift to a unified national tax has set off a wave of change in India’s notoriously inefficient logistics sector as companies alter the way they store, move and account for goods, the Agility Mid-Year Emerging Markets Review finds.
India’s Goods and Services Tax (GST), introduced July 1, rolled more than a dozen state and federal levies into a single tax. The GST is already prompting logistics providers and their customers to consolidate warehousing, revamp road freight strategies, and invest in system upgrades to improve the efficiency of their supply chains.
The GST could cut logistics costs in India’s formal, organized logistics sector by 20% and provide a dramatic boost to the country’s surging economy, according to the Agility report, which also examines the impact of the UK’s Brexit on emerging markets.
Essa Al-Saleh, CEO of Agility Global Integrated Logistics, said the GST and other changes encourage long-overdue investment in Indian infrastructure. “The GST eliminates borders and checkpoints between India’s 29 states, paving the way for big efficiency gains,” Al-Saleh said. “Companies can carry less inventory, move to hub-and-spoke warehousing, take advantage of long-haul trucking, and look to third-party logistics providers to improve operations and save.”
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