The Real Estate PE firm’s interest in warehousing and logistics park space will rise with the rollout of GST. The logistics sector being the biggest beneficiary and real estate sector will benefit since the requirement will be to set up huge logistics and warehousing parks.
With this rise in interest in the logistics sector, companies will concentrate on setting up hubs and distribution centers based on operational efficiency rather than in cheaper locations. Private equity firms are sensing better returns with lower real estate cost for setting up such warehouses and logistic parks. One country one tax model will now attract investments into logistics sector. Various taxes in different states were holding back seamless distribution of goods and related supply chain activities. Logistics and supply chain expenses can now be a value adds for manufacturers, as there will be more consolidation in the warehousing sector leading to few big players who will influence the e-commerce sector also.
Supply chain efficiency is going to become the single biggest differentiator in the ecommerce space as organizations strive to make ‘same-day delivery’ a cost effective reality. The GST is going to be a game changer for the fast-growing Indian economy.
Let us have a look at some other sectors as well
The IT sector has different delivery centers contracting to service a single contract. With duty on manufactured goods going up from 15% to 18% there will be a rise in cost of electronic goods.
FMCG companies will have substantial savings in logistics and distribution costs as there is no longer a need for multiple sales depots. GST of 19% is much lesser than the 25% tax that these companies paid as VAT, excise and entry taxes. Some of the companies that will benefit are Asian Paints, Colgate, Hindustan Unilever and GSK.
There are quite a few winners; there are sectors that may be affected adversely as well. Experts predict that insurance may cost more. So will flying become more expensive.
Source The Economic Times