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    Logistics, Freight & Customs Issues in India: by Rajeev K Chopra

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    ghag22909947
    The document discusses logistics issues related to doing business in India. It covers various topics such as market entry strategies, outsourcing trends, infrastructure challenges, and special economic zones (SEZs). Key points include that logistics costs in India are relatively high compared to GDP due to a small manufacturing base and low penetration of logistics providers. Infrastructure like ports, roads and railways need improvement to reduce transportation costs and times. SEZs provide tax benefits and can help companies become net foreign exchange earners.

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    Logistics, Freight & Customs Issues in India: by Rajeev K Chopra

    Uploaded by

    ghag22909947
    49 views30 pages
    The document discusses logistics issues related to doing business in India. It covers various topics such as market entry strategies, outsourcing trends, infrastructure challenges, and special economic zones (SEZs). Key points include that logistics costs in India are relatively high compared to GDP due to a small manufacturing base and low penetration of logistics providers. Infrastructure like ports, roads and railways need improvement to reduce transportation costs and times. SEZs provide tax benefits and can help companies become net foreign exchange earners.

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    DoingBusinessinIndialogisticsoverview-123616380339-phpapp02

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    The document discusses logistics issues related to doing business in India. It covers various topics such as market entry strategies, outsourcing trends, infrastructure challenges, and special economic zones (SEZs). Key points include that logistics costs in India are relatively high compared to GDP due to a small manufacturing base and low penetration of logistics providers. Infrastructure like ports, roads and railways need improvement to reduce transportation costs and times. SEZs provide tax benefits and can help companies become net foreign exchange earners.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    49 views30 pages

    Logistics, Freight & Customs Issues in India: by Rajeev K Chopra

    Uploaded by

    ghag22909947
    The document discusses logistics issues related to doing business in India. It covers various topics such as market entry strategies, outsourcing trends, infrastructure challenges, and special economic zones (SEZs). Key points include that logistics costs in India are relatively high compared to GDP due to a small manufacturing base and low penetration of logistics providers. Infrastructure like ports, roads and railways need improvement to reduce transportation costs and times. SEZs provide tax benefits and can help companies become net foreign exchange earners.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 30

    Logistics, Freight & Customs Issues In India

    by Rajeev K Chopra

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    Topics
    The Relationship of Market Entry Strategy and Logistics in India Most Popular Question Networks of Relationships an Adaptable Model for Exporters Designing Your Logistics Plan Key Practical Issues
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    The Relationship of Market Entry Strategy & Logistics in India


    Mode of Market Entry Export direct to customer, distributor or reseller Manufacture in India Types of Logistics Activities that are Outsourced Freight Forwarding, Express Courier, Customs Clearance, Break-Bulk, Delivery, Fund Management, Customer Service, Order Taking, Warehousing, 3PL, 4PL Import of raw materials by freight forwarding, Customs Clearance, Delivery to Manufacturing Facility, Warehousing, Distribution, Delivery, 3PL, 4PL

    Finishing of Product in India

    Import of unfinished product by freight forwarding to Finishing Centre, Customs Clearance, Delivery, Re-export by Freight Forwarding, Customs Clearance, Delivery
    All of the above confidential

    Mix

    Most Popular Question


    The most popular question I am asked by CEOs is IF WE DO NOT HAVE OUR OWN COMPANY IN INDIA, HOW CAN WE DO BUSINESS THERE AND GET PROFITS REPATRIATED BACK TO OUR HOME COUNTRY?
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    Networks of Relationships Adaptable Model for Exporters

    Partner A Logistics Service Provider Partner C Distributor, Reseller or Customer Partner A, B or C can be Agent
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    Partner B Importer Of Record (IOR)

    Networks of Relationships Adaptable Model for Exporters


    Channel of Distribution - Goods Logistics Partner IOR (Agent) Customer/ Reseller

    Mfr

    Channel of Distribution - Funds


    Profits (or Surplus after paying suppliers and taxes)

    Mfr

    Govt. (Duties, Taxes)

    Logistics Partner

    IOR (Agent)

    Customer/ Reseller

    Repatriation Of Profits
    COD Fund management up to USD$5,000 per remittance can be repatriated abroad Agent after paying and deducting all fees, suppliers, duties and taxes in India, balance profit can be repatriated abroad by Agent Branch Office after paying and deducting all fees, suppliers, duties and taxes in India, balance profit can be repatriated abroad by Branch Office
    Subject to Reserve Bank of India and Govt of India guidelines confidential

    Design Your Logistics Plan Key Practical issues


    Characteristics of Logistics in India Modes of transport Customs Taxes Configuration of Supply Chain SEZs

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    Logistics In India

    Different from developed nations in three

    important aspects
    Relatively small manufacturing base

    High logistics cost relative to GDP


    The very low penetration of specialist 3 PL

    providers in the country (< 5%)

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    Outsourcing Trends in India


    Predominantly Outsourced Current Debates 3PL Future Debates 4 PL

    Inventory Management Procurement

    Invoicing

    Added Value

    Order Processing Returns / Services Warehousing Customs Brokerage Transportation

    Express / Courier
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    Source: MDI Study 2004

    Outsourcing
    What are the major reasons for outsourcing of supply chain activities?

    Strategic Reasons 26%

    Process Effectiveness 24%

    Investment Reasons 12% Lack of Internal Capability 11%

    Lower Cost 27%

    Source: MDI Study 2004

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    Indias Economy & Logistics Cost


    Indias GDP is USD 691 billion and would touch USD 1.4 trillion in the next two decades (as per Goldman Sachs). Currently it is the 10th largest economy

    Contribution to GDP

    Work Force Employment

    Agriculture
    Manufacturing Service

    21%
    28% 51%

    60%
    17% 23%

    Indias Logistics Spend is currently 13% compared to 8.7% of the US.

    Enough Scope to reduce the Logistics Spend which would require growth of Logistics Service Providers and improvement in Infrastructure!! confidential

    Logistics Costs Key Driver of Logistics Strategy


    Components of Logistics Cost
    9% 11% 6%

    35%
    Transportation Inventories Losses Packaging Handling & Warehousing Customer's shopping

    14% 25%

    Nearly 40%( Inventory carrying costs + losses) of logistics cost is directly co-related with infrastructure. Just imagine the potential savings by having efficient and good infrastructure!!!
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    Surface Infrastructure in India A Snapshot


    Though Indian Railways freight volumes have increased, its share of total freight movement has reduced from 70% in 1951 to 30% in 1995. For total route length of 62,725 km, only 21% is electrified. Rail connectivity to ports, development of railways to the hinterland and faster freight trains are lacking.
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    New Highway Project


    Golden Quadrilateral Project Reduced transit time More lanes; larger trucks; greater economies of scale
    Indian Road Network
    Indian road network of 33 lakh Km.is second largest in the world and consists of : Length(In Km) Expressways National Highways State Highways Major District Roads Rural and Other Roads Total Length 200 66,590 1,31,899 4,67,763 26,50,000 33 Lakhs Kms(Approx)

    Source: www.nhai.org
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    CFSs (Container Freight Stations) & ICDs (Inland Container Depots)

    Infrastructure Development

    The Silk Road route linked China via Central Asia to Europe
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    Infrastructure Development
    Re-opening of Silk Road between India and China at Nathu La
    Started in July 2006 Customs, warehousing, storage and freight handling infrastructure are being developed.

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    Port Infrastructure in India A Snapshot


    Indian ports handle 3.9 million TEUs as compared to 48 million TEUs by China. Maritime transport accounts for 95% of country's foreign trade in terms of volume; yet the infrastructure at ports is very obsolete. Turnaround time at ports is very high as compared to other countries in the region.
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    Infrastructure Development
    Ports Nhava Sheva
    India's eight largest container ports handled about 3.8 million standard 20-foot containers last year (Containerisation International). Nhava Sheva, the biggest port on the Indian sub-continent, shipped 2.4 million containers. It takes as long as three-and-a-half days for a ship to unload and load at Indian ports, the government said last year. That compares to eight hours at Hong Kong, the world's biggest container port, which handled 22 million containers last year.
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    Infrastructure Development
    Ports Nhava Sheva
    Big congestion problem in 2004 Stacking of 16,000 TEUs against capacity of 11,500 TEUs 188 Crore in detention charges (Mar to Jul 2004); and 500 Crore loss of business for 2004
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    Infrastructure Development
    Ports Nhava Sheva
    Jawaharlal Nehru Port is converting a bulk cargo terminal into a container terminal at a cost of 9 billion rupees ($205 million) and the expanded capacity will be ready by 2010. The port will be able to handle an additional 1.5 million containers a year after the new terminal is built
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    What is the best mode?


    Road versus Air in India Think twice before committing to Air;
    Consider day of week Date required for delivery

    Calculate the break even points for Ocean, Air and Courier; ask your carrier to help

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    Thinking multi-modal
    Plan the modes according to cost and speed required. Some examples of multi-modal shipping used today:
    Air from China to Singapore, Ocean from Singapore to India Ocean from Guangzhou to Chennai, Rail from Chennai to Mumbai Air from Hong Kong to Chennai, Road from Chennai to South India, Air from Chennai to BOM, DEL and CCU
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    Environmental Factors
    Monsoon Season (June-August)
    Use multi-level racking warehouses Adopt dynamic approach to choosing airport gateways

    Fog Season (November-January)


    Prepare contingencies, especially for Delhi

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    SEZs (Special Economic Zones)


    SEZ's are duty free enclaves and are treated as foreign territory for trade operations & duties and tariffs. SEZ's provide internationally competitive & hassle free environment for exports, units may be set up in SEZs for manufacture of goods, rendering of services & trading. Up to 100% Foreign Direct Investment (FDI) in manufacturing sector is allowed through automatic route barring a few sectors. Units in SEZs have to be net foreign exchange earners within 3 years. Other benefits of SEZ's Exemption from customs duty on import of capital goods, raw materials, consumables & spares Exemption from Central Excise duty on procurement of capital goods, raw materials, consumables, spares, etc. from the domestic market 100% income tax exemption for a block of five years; 50% tax exemptions for two years; & Up to 50% of the Profits ploughed back for next 3 years under S.10-A of Income Tax Act Reimbursement of Central Sales Tax paid on domestic purchases

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    Thank You!
    Queries Welcome

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