FTWZs Transforming India’s Business Canvas

Indranil Dasgupta, CEO, Attivo Economic Zones Pvt. Ltd.
Mr. Indranil Dasgupta, CEO, Attivo Economic Zones Pvt. Ltd.

The Indian logistics industry is at the cusp of a significant transformation with strong structural changes that are expected to boost the economy and the country’s standing on the global platform. Domestic and foreign investments are creating positive sentiment, and FTWZ footprint is expected to expand in Tier II & III cities in the near future.


With the government granting the logistics industry an infrastructure status, both the domestic and foreign investments in Free Trade Warehousing Zones (FTWZ)s are expected to multiply, thus, boosting trade. In the backdrop of a rapid infrastructural development alongwith significant initiatives like Make in India and Smart Cities creation, Tier II & III cities will witness a promising potential for logistics and ancillary services, including FTWZs, in all probability.

FTWZs are a special category of Special Economic Zones, offering multifarious services including integrated solutions, such as packing management, re-invoicing, sorting, strapping and kitting, inspection, speedy delivery of cargo, one-stop for customs clearance capability, assembly of complete and semi-knocked down kits and taxation benefits.

Typically, FTWZs provide employment opportunities to approximately 15,000 to 30,000 people. As per the existing policies, FTWZs come with a host of benefits. These include duty deferment benefits and faster customs clearances, packaging, allowance of re-packaging and re-exports allowed, customised warehousing, break bulk, containerised and dry cargo storage. These benefits can be availed by importers, exporters and re-exporters.
FTWZs: Activities & Benefits
Duty free storage up to five years
Goods warehousing on behalf of local or foreign clientele
Direct saving on value
Quality checking, handling, consolidation, packaging, re-packaging
Resale, re-invoicing, re-export of goods
Tax savings, lower cost of logistics
No stamp duty applicable for EXIM via FTWZ

The last few years have witnessed some significant changes that are propelling this sector forward. These include growth in industrialization and trade, increased containerization and standardization. Other factors like increased focus on PPP projects and entry of multiple foreign logistics players coupled with PE investments have also had a long-term impact.

In its latest report, the World Bank has projected India's GDP growth at 7.3 per cent for the next financial year and accelerate further to 7.5 per cent in 2019-20. This, alongwith the ingress of foreign players and multinational companies, entry of multiple small & medium size logistics service providers, have upped the ante for higher service levels in logistic operations.

landfreight

Over the years, several changes in India have catalyzed the growth of the logistics industry in India (with a concomitant impact on FTWZs) leading to a positive sentiment among investors and the government. For instance, the gradual maturity of the logistics industry led to global 3PL firms making inroads in India. In the present scenario, DHL, Kuehne Nagel DB Schenker, Linfox Logistics etc. are some of the prominent international 3/4PL companies present in India. This has enhanced the overall quality of the developments and introduction of global best practices. Consequently, there is an increasing Investment inflow into the warehousing segment, which is positively impacting the quality of space provided and setting benchmarks on users’ expectations.

This growth trajectory has been further boosted by social changes. The burgeoning middle class, for example, coupled with their increasing propensity to spend, has led to a retail boom, which in turn has enhanced the demand for warehouses. Industry experts opine that a robust growth in the e-commerce industry will lead to a surge in the warehousing segment shifting importance of Tier-2 & 3 cities in terms of increased retail consumption, and hence, logistics activities.

The logistics industry functions on four primary parameters: segmented functions, integrated service, customer focus and serving as a differentiator. Its main function is to facilitate distribution of goods through transportation and storage and shift from physical distribution as the main focus of logistics to an entire system of activities working with and relying on one another. Logistics function not only to minimize cost but also to maximize profits and start looking at logistics as a way to satisfy the customer and also as a vital means of differentiation for the firm. It is, therefore, viewed as a critical component in the strategy of the firm.

page inventory

Competitive pressure to enhance service quality, consolidation among service providers, enhanced service outsourcing, participation in supply chain planning activities and enhanced operational efficiencies through optimization are the major drivers of growth of the logistics industry in India. Given these factors, experts point out that FTWZs are critical to India’s future roadmap. While there have been a series of developments in this sector, the way supply chains are executed will change over the next decade. Also, a lot depends on what the duty structure is going to be.
The Indian logistics industry is evolving from traditional unorganized players to full-fledged logistics service providers offering complete supply chain services, thus making the current scenario potent for increasing trade.

On the imports, exports and re-exports scale, there are big positives for FTWZs. To begin with, reduced buffer stocks, lowered product costs, foreign exchange transaction capability make them an attractive option. Besides this, there’s flexibility towards end distribution in India and duty deferment benefits and quality control capability prior to duty-payment. On issue of export benefits, products from India entering the FTWZ are treated as deemed export providing immediate benefits to the suppliers and other benefits such as increased efficiency through lowered reverse logistics, quality control before dispatch from India, and more supply chain efficiencies (forward & reverse) while enhancing capital cash flow.

bonded terminal

For re-exports, there’s 100% FDI for setting up the units, besides exemption from custom and import duty on products imported into FTWZ meant for re-export out of the country. Other advantages include Income tax rebate on profit earned through export transaction, and Goods and Service tax exemption on all activities conducted inside the FTWZ, including rental and labor.
It is estimated that Grade A and B warehousing stock will grow at a CAGR of 21% year-on-year basis taking the total tally of warehouse space in India to 297 million sq.ft. by the end of 2021, which is double the warehousing stock of 139.8 million sq.ft. in 2017.

Going ahead, there are several key growth drivers of FTWZs that have to be taken into consideration. FTWZs do have a huge potential to boost the import-export trade in India. A modernized and efficient supply chain not only improves the ease of doing business, but it also cuts down the costs of manufacturing. It is also a catalyst in ensuring that urban and rural consumption growth is definitely better owing to a better access to the market.

There is no doubt that FTWZs carry big potential for import-export trade in terms of revenues and volumes. Eventually, value addition and last-mile customization will drive growth in the FTWZ segment in the future and pave the way ahead.

NBM&CW June 2018

Click Here
To Know More / Contact The Manufacturer
Please fill in your details, we will contact you as soon as possible
Choose Title from the listPlease let us know your name.
Please let us know your Designation.
Invalid Input
Please let us know your email address.
Please let us know your City.
Please let us know your Contact Number.
Please brief your query.
Our other value-added services:

To receive updates through e-mail on Products, New Technologies & Equipment, please select the Product Category(s) you are interested in and click 'Submit'. This will help you save time plus you will get the best price quotations from many manufacturers, which you can then evaluate and negotiate.

Equipment & Machinery
Invalid Input
Building Products
Invalid Input

Goldhofer & Universal Transport 40-Year-Old Tie Becomes Stronger

The oversized load and heavy hauling company Universal Transport of Paderborn is modernizing its wind power transportation fleet with 62 THP/SL-S (285) axle lines from the house of Goldhofer. With a vehicle width of Read More ...

India’s Logistics & Warehousing Abundant Opportunities

High-intensity focus on making India a global manufacturing hub has caused warehousing clusters to expand rapidly beyond the top cities and into tier 2 and 3 cities, reveals ‘Indian Industrial & Logistics – Gearing Up a Global Read More ...

Automation: Moving from Luxury to Necessity

Satish Shukla, Co-Founder & Head - Marketing & HR, Addverb Technologies, shares details of the company’s highly advanced intra-logistics automation solutions and plans to go global with their technology Read More ...

Performing a Ro-Ro Operation By Marco J. van Daal, Owner, The Works International

Ro-ro is short for “roll-on, roll-off” which covers both operations from shore to barge as well as from barge to shore. There is a significant difference between the roll-on and the roll-off operation Read More ...

Hofmann Kran-Vermietung is using »BLADES« to handle the latest generation of wind turbine blades

For transporting extra-long wind turbine blades, Hofmann Kran-Vermietung GmbH & Co. KG of Paderborn is now using the new »BLADES« blade hauler in combination with Goldhofer's self-tracking trailing dolly. The German company Read More ...

Anipsotiki S.A. places trust in Goldhofer’s FTV Blade Lifter to transport wind turbine blades

When it comes to erecting sustainable wind power plants in the windy regions of Greece, Anipsotiki S.A. (Aspropirgos/GR) is often the company of choice for turbine manufacturers and wind farm operators. In order to transport Read More ...

Faymonville - The new WingMAX for XXL Rotor Blades

Rotor blades are an elementary component of a wind turbine. The trend is towards increasingly large blades with a length of well over 70 m. Such XXL elements can be moved safely and economically to the operation site Read More ...

SPMTs from SCHEUERLE help Riga Mainz carry out exceptionally efficient bridge replacement

The IHT Ingenieur- Hoch- und Tiefbau GmbH / Arge Ersatzneubau EÜ Mainzer Straße in Darmstadt commissioned Riga Mainz to replace several aging Deutsche Bahn railway bridges. SPMT axle lines from SCHEUERLE along with a very special Read More ...

BIAL opens India’s first On-Airport Public Bonded Warehouse

As part of its vision to make Kempegowda International Airport, Bengaluru (KIAB/ BLR Airport) a successful cargo hub, Bangalore International Airport Limited (BIAL) has opened India’s first on-Airport Public Bonded Read More ...

Strata raises 140 crore for Warehouse investment opportunity amid lockdown

Strata, a tech-enabled fractional investment platform for premium Commercial Real Estate (CRE), has raised Rs. 140 crore for a consortium of three grade-A warehousing asset opportunities amid the Covid-19 pandemic Read More ...

Spectacular heavy transport over 1,400 km in Australia: SCHEUERLE WideCombi ensures high transport efficiency for Doolan's Heavy Haulage

Australian heavy-duty specialists from Doolan’s Heavy Haulage have transported two 160-ton crusher components using WideCombi axle lines made by SCHEUERLE. Due to the low dead weight and low height of the transport Read More ...

SpeditionTrettin has relied exclusively on MEILLER tippers for generations

Hans-Otto Trettin and his son Lukas chose the right time to reorient their company, as the future of the transport business for the mining industry looked bleak with the closure of the last mines. The mainstays Read More ...

Eicher launches BS-VI solution - EUTECH6; unveils new-gen vehicles across 4.9T- 55T

Leading commercial vehicle manufacturer, VE Commercial Vehicles Limited, (VECV) unveiled its entire BS-VI range of trucks and buses across 4.9- 55T tagged with Eicher’s innovative BSVI solution - EUTECH6. The new platform Read More ...

First Cometto MSPE delivery to Taiwan

The total volume for the Taiwanese equipment manufacturer includes two 6-axle modules type MSPE 6/4/2,43 with an axle load of 40t, two power packs with an output of 110 kW each, and numerous additional accessories. The complete Read More ...

Effect of COVID-19 on Road Logistics and Impact on Movement of Goods

The Transportation sector has been one of the primary victims of COVID-19. From rickshaw pullers to the airlines, all have been affected economically by the pandemic. India's overall energy demand fell by 14% in March-April 2020 Read More ...

Goldhofer’s new »STEPSTAR« semi lowloader gives higher payloads and greater flexibility

With the »STEPSTAR« series, Goldhofer has added a new generation of self-tracking semi lowloaders to its extensive range of heavy-duty and special transport solutions. The three- to five-axle semi-trailers offer haulage Read More ...
NBM&CW

New Building Material & Construction World

New Building Material & Construction World
MGS Architecture

Modern Green Structures & Architecture

Modern Green Structures & Architecture
L&ST

Lifting & Specialized Transport

Lifting & Specialized Transport
II&TW

Indian Infrastructure & Tenders Week

Indian Infrastructure & Tenders Week