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VAT introduction to revitalise Indian logistics market

VAT introduction to revitalise Indian logistics market

London: India's third-party logistics (3PL) market is all set to experience a period of explosive organic growth and hit the $125bn mark by 2010, says market analyst Datamonitor in its latest report India Logistics Outlook 2007. The country is known for its infrastructural difficulties that make travel to and from ports extremely unreliable. The report states that at present, the twelve major ports of India handle volumes higher than their full capacity, resulting in pre-berthing delays and longer ship turn-around time compared to its East Asian counterparts like China and South Korea. Additionally, the inadequate road network across the country increases logistical difficulties.

However, the analysts believe that the increasing use of 3PL services will herald in a new age of organisation and customer service. "Strong growth enablers exist in India today in the form of over $300bn worth of infrastructure investments, phased introduction of value-added-tax (VAT), and development of organized retail and agri-processing industries. In addition, strong foreign direct investment inflows (FDI) in automotive, capital goods, electronics, retail, and telecom will lead to increased market opportunities for providers of 3PL", said Datamonitor logistics analyst Praveen Ojha who authored the study.

The company particularly stresses the importance of the introduction of VAT, which will replace a plethora of state and central government taxes and is expected to enhance the efficiency of the industry by lowering transit times and the associated paper work.  [20/02/07]