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 recently released Agility Mid-Year Emerging Markets Review (prepared by Transport Intelligence) has underlined.
According to the report, India’s Goods and Services Tax (GST) 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 on the report findings, “The GST eliminates borders and checkpoints between India’s 29 states, paving the way for big efficiency gains, 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.”