Plans to expand network to more commercial hubs.
DHL Supply Chain (DSC) currently has an impressive footprint of 7 million sq. ft. in India with Multi Client Sites (MCS) forming nearly half of this footprint. With the introduction of the Goods & Services Tax, the company is planning to aggressively expand its warehousing presence in the country.
“We will double our MCS warehouse space from the current 3.5 million sq ft by 2018 as storage demand will increase,” said Vikas Anand, managing director of DSC.
The company is well represented in 50 cities across India, and over the next few years plans to make inroads into several state capitals and commercial hubs, to offer world class supply chain solutions across the length and breadth of the country. .
GST is not just a tax change but a big change in business systems in India, said Anand who is part of the DHL group who is working closely with the authorities and our customers to prepare for the implementation of GST.
DHL has presented a number of white papers on GST in India, sharing its working experiences from global network.
The Indian and international corporations are already reworking their logistics management plans, and DHL is being consulted by an increasing number of its clients which include Fortune 100 companies as well as global operators.
Supply Chain and logistics heads of these companies have been visiting India during the past six months with the focus on how to manage GST in a mega market, according to Anand.
Micro, small and medium enterprises (MSMEs) will also have to start working soon on their warehousing set ups, he believes.
The current warehouse arrangements are small and fragmented, mostly aligned to suit the outgoing state-by-state tax systems.
“But we see consolidation of warehouses, new storage space based on market requirements and aligned with transportation network,” said the industry veteran.
The investment in warehouse consolidation and new logistics centres with transportation network will take off as soon as GST is stabilized across the country.
Barring initial hiccups, which cannot be ruled out as India undertakes a massive change in the way business is done, a new array of warehousing hubs and logistics centres will be built at an accelerated pace, each unit to be completed within one year to two years.
The retailers and distributors will start thinking of big boxes for economies of scale. Currently, the typical size of warehouses ranges between 20,000 and 25,000 sq. ft. At DSC, we have been investing ahead of the curve in anticipation of GST and our large Multi Client Sites (MCS) are an average size of 2 lakh sq. ft.
Transportation
The transportation network will undergo massive change. Trucking and cargo handling will have e-way bills as GST will be paperless, he said.
Current freight movements via trucks, rail and others, will move faster than the usual speed of 20-30 km per hour seen for decades under the cumbersome taxing system and cross-border checking.
Comparatively, goods movement by trucks crisscrossing European Union run at a speed of 60-80 kmph.
The GST is also looking at rating vendors handling cargo and freight with green, amber and red labels.
Green would allow freer movement of goods for companies having complied with all laws of the land.
Amber means the company is in the process of compliance and red is for those still sitting on the fence on how to manage freight movements.
This, Anand feels, would speed up cargo movements.
While the government and businesses are working on introducing GST as smoothly as possible, there is, no doubt, a concern about rolling out the new tax from paper to the ground.
“India’s best brains are working on implementing the GST,” assures Anand.
The world will see one of the largest data uploads on the GST Network which will have to be very strong. There is no room for slip-ups or mistakes, he stressed.
The government is determined to roll out GST as smoothly as possible, although there is no beta plan for backup.
“Indian businesses are watching the progress of the process on a daily basis with concern about the big data migration to the GST Network,” he observed. fii-news.com
