Improvements to India's supply chain will boost business
India’s Supply chain operations, which have been dogged in the past by a convoluted tax structure and poor infrastructure, are set to improve over the next few years due to a new government bill, according to Crimson & Co.
Alongside a new focus on infrastructure improvements, there are more opportunities for companies to increase market share while decreasing supply chain costs – this according to the global supply chain consultancy.
India’s supply chains have long been held back by border regulations and poor road-surfaces. Cross-country road freight transport is slowed by stop-and-search controls at, complex forms to verify goods, and taxes on import, manufacture and the sale of goods, alongside central government taxes.
That being said, government legislation in recent years has opened doors to dramatic improvements to India’s supply chains. The Goods and Services Tax (GST) Bill, officially known as The Constitution (122nd Amendment) Bill 2014, is set to be a game changer for the economy when it is fully implemented (expected to be by 2017).
It has been billed to reduce the tax burden on companies and impact on supply chain optimisation, allowing warehouse consolidation, distribution hubs and inventory reduction.
The Indian government has heavily invested in improving India’s national motor highways and is also developing the Dedicated Freight Corridor in the rail network. This will significantly increase rail transport speed, decrease costs and enable intermodal transportation.
Ravikant Parvataneni of Crimson & Co India, said that these changes mean that businesses can optimise their supply chains, increasing efficiency in line with local market requirements.
“Business leaders in India have long faced difficulties in operating nationally with fractured supply chains and historically poor infrastructure necessitating numerous local operations. This strategy is not only costly to set up and operate, but coordinating transport can become a logistical nightmare.
“The GST Bill 2014 will work wonders for supply chain efficiency. With uniform taxation and better infrastructure, businesses can consolidate their supply chains. Industries that rely upon the frequent movement of raw materials over long distances such as minerals and tea already benefit from rail transportation but the Dedicated Freight Corridor will have a significant impact on the consumer goods sector in the future.
Ravikant concluded: “There has never been a better time for businesses to start reconfiguring their supply chains in India. With operations no longer dictated by the tax regime and infrastructure improvements over the coming year, supply chains in India can start to deliver significant cost savings.”
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