Recently government has given infrastructure status to logistics. How is it going to impact the logistics scenario?
2017 was an interesting year for Indian logistics ecosystem. First GST and then infrastructure status to Logistics has given impetus to the industry. Logistics cost in India is about 13 % of GDP which is very high compared to 8 % – 9 % logistics cost in developed countries. This was an important step to boost the logistics infrastructure which subsequently will reduce the overall logistics cost and will improve competitiveness of Indian products in the global market.
The new status for the logistics Industry will make it easier for companies to raise funds for longer duration and at lower rates. Companies would now be eligible for accessing longer tenure funds from pension funds and insurance agencies. This would also let logistics companies to borrow larger funds as external commercial borrowing.
For real estate firms it means ease of availability of funds at lower interest rates. This would enhance the logistics infrastructure and ensure availability of better and cheaper warehouses and associated facilities for the 3PLs. Manufacturers will be the biggest beneficiaries with savings on logistics spend which would improve their bottom lines and make their products more competitive in international markets.