The World Bank says India, now the world’s fastest growing economy, is relatively well-positioned to weather global volatility and even set for a modest acceleration in growth in the years ahead. The World Bank’s latest India Development Update expects the country’s economic growth to be 7.8% from April 2016 to March 2017 and 7.9% in 2017-18.
For the shipping and logistics sector the country provides opportunities and challenges. One of the key developments eagerly awaited by business sector is the introduction of the Goods and Services Tax (GST) which when implemented will unify a plethora of other taxes which add cost, time and inefficiency across the supply chain.
The proposed GST model for India is expected to absorb or replace most of the existing direct and indirect taxes levied by the Central and State Governments on all products and services.
As a result of GST, logistics service users or manufacturing industries will need to reorganise their overall distribution infrastructure. Logistics Services Providers serving any specific industry would have to realign their operations to match this restructuring.
The Government had planned to introduce the Goods & Service Tax in April 2016; this would have had a positive impact on GDP by at least 2%; due to lack of support from opposition parties this has been postponed until 2017.
Problems are also prevalent in poor infrastructure and land acquisition for logistics facilities which the new government is looking to address and will be presenting new bills to India’s Parliament which are aimed at streamlining the laws governing industrial land development.
India’s consumer confidence continues to be the highest globally, riding on a positive economic environment and low inflation.
For Toll Group, which has offices across the country, there is optimism that the freight and logistics sector will go from the strength to strength. Rajeev Sood, Managing Director, Toll Global Forwarding India says that even if the GST bill is postponed, he expects the Indian economy to grow by around 6%.
“Toll in India is expanding its reach to markets which are conducive to business growth. In last six months we have opened three new sales offices in Rajkot, Jaipur, Tripur and one branch office in Cochin. This has resulted in promotion of Toll brand in areas where we did not have any presence and we have gained new businesses resulting in overall growth.”
The Indian Government is focused on the ‘Make in India’ concept and supporting new business ventures and Sood is confident that the pro-business policies will bear fruit.
“I am quite bullish on exports. The Toll India strategy for financial year 2016 is to focus more on exports. Toll in India was primarily known for its import selling capabilities. In last six months we have tried to change the perspective of our customers by being extremely aggressive on the export opportunities. We have shown high double digit growth in ocean export (85%) and air export volumes (40%) in first six months of this fiscal year. New sales offices opened in areas mentioned above are all export focused,” he added.
The story on India’s domestic market is just as positive, as the country’s burgeoning middle class show a sustained appetite for imported goods and services.
“India’s consumer confidence continues to be the highest globally, riding on a positive economic environment and low inflation. The growing purchasing power and rising influence of e-commerce have enabled Indian consumers to spend their money on luxury items. The majority of the consumer base are young Indians who are extremely brand conscious,” added Sood.
Following are some major investments and developments in the Indian consumer market sector:
- Bosch & Siemens, the largest manufacturer of home appliances in Europe, plans to manufacture more products in India in the next three years, led by rise in demand for premium home and kitchen appliances.
- San Francisco-based Fitbit Inc., a fitness-tracking device maker, has launched its fitness wristbands across 300 towns in India and expects the country to be among its top five markets in next two years, with increasing demand for health monitoring devices in the country.
- Italian premium apparel and denim brand GAS has planned to form a joint venture company with Reliance Brands for consolidation and expansion of its business in India.
- FMCG major Hindustan Unilever (HUL) announced a reorganisation of its go-to-market operations from the traditional four sales branches to 14 consumer clusters in order to provide services to diverse consumers across channels and geographies. The company has termed the initiative as “Winning in Many Indias”.
- Hero Group is set to acquire a majority stake in direct-to-home devices manufacturer Mybox Technologies through its subsidiary Hero Electronix. The deal is the first step by Hero Group, which operates in numerous business verticals, towards entering the consumer electronics market.
- Chinese technology major Huawei is entering the consumer broadband networking segment in India, with a range of devices aimed at homes and SOHO customers. With the aim to strengthen its position in the Indian market, online cashback and coupon site CashKaro.com plans to list about 50 global retailers over the next six months, according to one of its founders.
- Smartphone brand Gionee is entering the urban market in a big way through tie-ups with India’s top large format retailers. The company’s smartphones will now be available at stores such as Spice, The Mobile Store, Mobiliti World, Jumbo Electronics, Croma Retail and Planet M retail, expanding its overall footprint to over a thousand retail stores.