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Logistics to grow at 10%, GST to benefit organized players: Icra

LiveMint logoLiveMint 03-07-2017 PTI

Mumbai: The logistics sector is to grow at 9-10% in the medium term on GDP expansion, and the goods and services tax (GST) era will see benefits accruing to organized players, a report said on Monday.

“Indian logistics industry is at the cross-roads, poised for growth on the back of the economic recovery and changing industry dynamics,” domestic ratings agency Icra said in a note. The GST, which got introduced on Saturday, will favour organized logistics players going forward, it said. The organized players will benefit because under GST, there will be a consolidation of warehousing network, higher degree of tax compliance and creation of a level playing field between “express” and traditional transport services through input tax credit, it said.

“The domestic sector is currently in a transformation phase with game-changing trends like implementation of GST, increasing focus by foreign investors across the logistics value chain, growing demand for end-to-end solution providers and emergence of new avenues such as e-commerce, logistics parks, cold chains and new start-ups,” Icra’s group head for the corporate sector, Subrata Ray, said. There will be a greater focus on multi-modal logistics on the back of increased thrust from the government, it said.

The railways, which have lost market share in the total freight movement over the last few years and now account for around a 30% share, will benefit from the dedicated freight corridor (DFC) expected to get operationalized in 2019. “DFCs would be a game changer as it would possibly remove several inefficiencies in freight movement. After many delays, the DFCs are now expected to commence operations from 2019. On both the eastern as well as western corridors, Railways will stand to gain traction from road segment,” it said.

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