image

Due to GST implementation, global players will now touch the Indian ground in the express logistics market: Bonafide Research

After the GST implementation, global players have started to view the Indian logistics industry as an extremely favourably one and thus have announced intentions to increase their capacity of transporting goods from/ to Indian markets. In the last few years, several large global companies have entered by the way of mergers or acquisitions or joint venture agreements. With the implementation of GST, global players have set their eyes on Indian market for expansion of their express logistics businesses.

India express logistics sector is primarily categorized into four segments that include surface express, air express, rail parcel and Indian postal services. Surface express logistics contributes the maximum market share followed by air express and rail parcels. There is an unfavourable model mix in the Indian logistics sector that is skewed towards roads as a major mode of transportation, along with underutilization of other modes viz. rail, air and coastal shipping. Despite being insufficient mode, surface express has the highest time bounded shipments traffic share in India. Whereas railways being economic mode of time bounded shipments, transportation has lost the market share in India due to under investments leading to capacity constraints. Air express is an emerging category in India which is led by major players like Blue Dart and FedEx. Air express is the quickest possible way for time bound shipments in countries like India.

According to recently published report of Bonafide Research "India Express Logistics Market Outlook, 2022" express logistics market is gaining traction, with e-commerce penetration, economy revival, GST implementation and government's initiative of 'Make in India'. The market is expected to grow with a CAGR of close to 15% in the next coming years. A well organized and mature logistics industry has the potential to leapfrog the 'Make in India' initiative to its desired position. Also, government of India has been taking various initiatives in order to develop road, rail and air infrastructure in the country. Major government projects like Sagar Mala and Bharat Mala will reduce the time duration of shipments in coming years due to better connectivity across country. However currently, the game changing event is the implementation of GST on 1st July 2017.

GST implementation has changed the scenario in India express logistics industry by replacing multiple taxes levied by central and state governments. The planned dual GST model (CGST+SGST) has replaced around 29 states and federal taxes and tariffs for a single tax at the point of sale. Hence, most of the current challenges of logistics industry will be a story of the past as the goods can now move freely inter-state without any levy. The taxation in express logistics will come down to 18-21% from almost 27%. Global players like UPS, XPO Logistics, J.B hunt, C.H Robinson etc. have already set their eyes on the Indian industry for investment and expansion of their businesses. This has opened the gate for new entrants in the express logistics market. GST implementation will benefit organised sector the most, in terms of consolidation and merging of small players with larger players to leverage the mutual benefits. The sector will also attract interest from global players through foreign direct investment, joint ventures or acquisitions.

Major companies operating in the express logistics market of India are Gati Limited, Blue Dart Express Limited, Safexpress Private Limited, Mahindra Logistics Limited, TVS Logistics Services Limited, V-Xpress (India) Private Limited, Future Supply Chain Solutions Limited, Transport Corporation of India Limited, Startrek Logistics Private Limited (SpotOn) and FedEx Express Transportation & Supply Chain Services (India) Pvt. Ltd.


Related Press Releases

image

Government initiatives to develop the infrastructure will speed up the growth for express logistics industry in India: Bonafide Research

Read More
image

More than 100 Crore e-Commerce Deliveries will be made across the India by 2021: Bonafide Research

Read More
image

E-Commerce focused Logistics start-ups taking away the bigger pie of e-Commerce Logistics market from Traditional LSPs

Read More
Subscribe