“The prospect of GST going into effect can be positive, but some states are holding back,” APL’s Frentzel explained. “It’s based on logistics rather than tax factors and creates a uniform common market across India.”
A quick look at infrastructure
Infrastructure, long a problem in India, is slowly progressing. “The grand plans are there,” said Frentzel, “but execution hasn’t followed as quickly. There is investment, but there is a lot of work to be done. It’s mostly private investment.” That’s where adoption of the new FDI, with its requirement of 50 percent of investment in infrastructure (as noted prior) will pay dividends.
When it comes to warehouses, there also is slow growth as Indian companies move from in-house operations to 3PLs that establish Warehouse Management Systems (WMS). It can often take several months to get the required permits to open a warehouse. Typically, warehouses in India are small, often as small as 5,000 square feet.
“Development of Grade A warehouses still is limited,” Frentzel said. “They’re going up, but not all are ‘A’ quality.”
What’s Frentzel’s advice? “Be extremely nimble and flexible, a jack of all trades. Work different transportation options, all modes—ground to rail to intermodal. Understand the trade lanes and continue to develop and improve infrastructure.”