GST could cut logistics costs in India’s organized logistics sector by 20%: Agility Report

July 20, 2017: The GST could cut logistics costs in India’s formal, organized logistics sector by 20 percent and provide a dramatic boost to the country’s surging economy, says the Agility Mid-Year Emerging Markets Review 2017. The report further says that 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 Agility report was prepared by Transport Intelligence, a major analysis and research firm for the logistics industry.

Speaking about the major tax overhaul Essa Al-Saleh, CEO of Agility Global Integrated Logistics points out that the GST will encourage long-overdue investment in Indian infrastructure. “GST eliminates borders and checkpoints between India’s 29 states, paving the way for big efficiency gains,” Al-Saleh says. “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.”

The report also makes a mention of demonitisation, which curtailed economic activity in the country’s massive, cash-based informal sector of small merchants, truckers and others, in the late 2016. However, it concludes by saying that the impact of the move will be short-lived.