Pune: Several cities in Maharashtra, including Pune, Nagpur, Kolhapur and Aurangabad, are likely to witness a boom in warehousing after the implementation of Goods and Services Tax (GST) from July 1.
Being manufacturing hubs and centrally-located, these cities are likely to be preferred for stocking of manufactured goods. Sanjay Phadke, from GST Suvidha Provider (GSP) Vayana Network, said that a single tax regime across the country will make companies look at reducing the number of warehouses. “As GST will do away with multiple indirect taxes like Octroi and LBT, companies will look at reducing the number of warehouses. Earlier, as state taxation norms differed, companies invested in multiple warehouses in different states. With a single tax regime, companies can stock goods at central locations and ship them across the country,” he said.
He said warehousing firms will stop looking at incentives provided by states for setting up warehouses and instead focus on economy in terms of land cost and distance for transportation of raw material and finished goods. According to Phadke, companies are looking at larger centrally-located warehouses and smaller warehouses closer to consumers.
“For example, if a product was being shipped from a manufacturing location in Himachal Pradesh to a stockyard in Bengaluru for supply in Karnataka and similarly shipping was happening to a stockyard in Kerela. Now, the company can go for a larger stockyard in Bengaluru to supply the whole of south India,” Phadke said.
Phadke said GST will lead to consolidation and automation. “Well organised players in the warehousing segment will now come up as companies will look for larger warehouses. There is huge investment in the warehousing sector to take advantage of this consolidation. This scaling up will result in more automation in warehousing as multiple levels of stocking will lead to requirement of technology like robots,” he said.
He said this will lead to a larger transportation network in the country. “With centrally-located warehouses, a boost will be provided to longer capacity heavy commercial vehicles. If a truck was running 200 km a day, it will now run 400 km a day. Longer capacity vehicles will see more demand due to changes in warehousing patterns,” Phadke said.