GST will lead to 100 per cent growth in warehousing, says report
The focus would shift on efficiency rather than tax saving through smaller warehouses.
Kolkata: Goods and Services Tax (GST) will usher in a new era for the warehousing and logistics sector in India that could see at least 100 per cent growth in the sector by 2021, a report said on Friday.
Real estate services firm JLL India in its report estimated that warehousing space in India will increase by 112 per cent by end of 2021. It said, GST is playing a pivotal role in boosting both the hub and spoke model as well as the growth of the MultiModal Logistics Park (MMLP).
"As a result of which, India will see over 20 per cent CAGR in warehousing and will have approximately 25 new MMLPs in the next few years," a JLL statement said.
As of 2017, the total combined warehousing space (grade A and grade B warehousing) was 140 million sq ft. This was expected to jump to 297 million Sq ft.
"Implementation of GST has had a positive effect on warehousing activities in India due to diminishing state boundaries," JLL India CEO and country head Ramesh Nair said.
The most prominent impact of GST on the warehousing sector will faciliate companies to explore a different distribution model from the traditional carrying and forwarding (C&F) distributor based models.
It will also boost consolidation post GST, the focus would shift on efficiency rather than tax saving through smaller warehouses, it said. In an earlier report, JLL India had estimated that close to Rs 45,000 crore will be invested in creating storage facilities across India from 2018-2020.